Assume the Economy Is Initially Operating at the Natural Level

Multiple Choice

Assume the economy is initially operating at the natural level of output. Now suppose that individuals decide to increase their desire to save. We know with certainty which of the following will occur in the short run as a result of the increased desire to save?

A) Higher investment.
B) An increase in the nominal wage.
C) No change in the economy at all.
D) A decrease in the nominal wage.
E) Lower investment.