According to Keynesian analysis, if households intend to save more, they will
A) ultimately spend more.
B) cause jobs to increase because investment will increase.
C) ultimately cause job losses.
D) cause the GDP to increase because inflation will decrease.

Question

Quizplus · Accepted Answer

According to Keynesian analysis, if households intend to save more, they will ultimately cause job losses. This is because when the demand for goods and services decreases due to decreased spending, businesses will produce less and ultimately lay off workers to reduce costs. This reduction in demand can lead to a decrease in the overall level of economic activity, also known as a recession.

According to Keynesian Analysis, If Households Intend to Save More