Business, 23.07.2020 18:01 dyshekagraves

An increase in household saving causes consumption to a. fall and aggregate demand to increase. b. rise and aggregate demand to increase. c. rise and aggregate demand to decrease. d. fall and aggregate demand to decrease.

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Answer from: haileysmile2006

Consumption is termed as the process of consuming goods and services by the customers or the households. This is also known as the degree of quantity demanded as it depends on the power of consumption of the individual.

The correct answer is d. fall and aggregate demand to decrease.

When household savings increase, consumption falls because the money available for consumption, such as food, clothes, and other goods, is reduced in order to encourage household savings.

Furthermore, aggregate demand, which is used to assess the overall degree of consumer spending generated in an economy, would fall since a rise in consumer spending will accidentally result in a drop in household savings.

As a consequence, growing savings necessitates lowering expenditure and product demand.

To know more about the consumption of the individuals, refer to the link below:

link

Answer from: brillamontijo

d. fall and aggregate demand to decrease.

Explanation: When household savings increase, the consumption will fall, as the money which should be spent on consumption such as food, clothing and other products will reduce in other to foster household saving. Also, aggregate demand which is used to measure the total amount of demand for goods and services produced in an economy will also decrease as increase in aggregate demand will inadvertently lead to decrease in household saving.

Therefore, increase in savings requires reduction in spending and demand for products.

Answer from: Quest

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Answer from: Quest

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An increase in household saving causes consumption to a. fall and aggregate demand to increase. b. r...

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