Consider a Simple Macro Model with a Constant Price Level

Multiple Choice

Consider a simple macro model with a constant price level and demand- determined output. In such a model, a downward shift of the saving function causes equilibrium national income to

A) remain constant because it does not affect desired aggregate expenditure.
B) remain constant but consist of less consumption and more investment.
C) fall because the AE function shifts downward simultaneously.
D) rise because the AE function shifts upward simultaneously.
E) remain constant but consist of more consumption and less investment.