Suppose households become more future-oriented and decide to save more at each i
ID: 1176208 • Letter: S
Question
Suppose households become more future-oriented and decide to save more at each income level. All other things unchanged, this will shift the aggregate demand curve to the right. shift the aggregate demand curve to the left. not affect aggregate but rather aggregate supply because firms will now produce less. shift both the aggregate demand curve and the aggregate supply curve to the left. Suppose households become more future-oriented and decide to save more at each income level. All other things unchanged, this will shift the aggregate demand curve to the right. shift the aggregate demand curve to the left. not affect aggregate but rather aggregate supply because firms will now produce less. shift both the aggregate demand curve and the aggregate supply curve to the left. shift the aggregate demand curve to the right. shift the aggregate demand curve to the left. not affect aggregate but rather aggregate supply because firms will now produce less. shift both the aggregate demand curve and the aggregate supply curve to the left. shift the aggregate demand curve to the right.Explanation / Answer
1 shift the aggregate demand curve to the left. AS GIVEN IN THE STATEMENT HOUSE HOLD SAVING MORE MEANS SPENDING LESS THUS REDUCING THE AGGREGATE DEMAND. INITIALLY AGGREGATE DEMAND CURVE WILL SHIFT TO ITS LEFT WHICH WILL RESULT IN EXCESS SUPLLY WHICH RESULTS INTO LOW PRICES HENCE LOW PROFITS AND LOW FUTHER INVESTMENT BY THE FIRMS HENCE LESS SUPPLY OF GOODS.