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When households decide to save a larger share of their income, what happens to the short-run aggregate supply curve and the aggregate demand curve?

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Kristelle Balando
Kristelle BalandoLv10
27 Oct 2020

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Related questions

Explain whether each of the following events shifts the short run aggregate supply curve:

A. Households save larger share of income

B. Orange groves suffer large period of cold temperature

C. People move to other countries for job

Explain whether each of the following events shifts the short-run aggregate-supply curve, the aggregate-demand curve, both, or neither. For each event that does shift a curve, draw a diagram to illustrate the effect on the economy.

a.Households decide to save a larger share of their income.

b. Florida orange groves suffer a prolonged period of below-freezing temperatures.

c.Increased job opportunities overseas cause many people to leave the country.

Explain whether each of the following statements is true or false, justifying your response.

The short-run aggregate supply (SAS) curve slopes upward because households spend more as their incomes increase.

The long-run aggregate supply curve can never shift.

Either a decrease in the nominal money supply by the Federal Reserve, all else held constant, or an increase in the price level, all else held constant, will shift the aggregate demand (AD) curve to the left.

The Keynesian portion of the short-run aggregate supply (SAS) curve would be relevant during a recessionary situation.

Stagflation occurs when the aggregate demand (AD) curve shifts out on the upward sloping portion of the short-run aggregate supply (SAS) curve.

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