use the identity: as a basis to answer the following questions. in the keynesian model, if disposable income…

use the identity: as a basis to answer the following questions. in the keynesian model, if disposable income were to decrease households would\na. decrease saving and increase consumption.\nb. decrease consumption and increase saving.\nc. decrease both their consumption and saving.\nd. increase both their consumption and saving.

use the identity: as a basis to answer the following questions. in the keynesian model, if disposable income were to decrease households would\na. decrease saving and increase consumption.\nb. decrease consumption and increase saving.\nc. decrease both their consumption and saving.\nd. increase both their consumption and saving.

Answer

Brief Explanations:

In the Keynesian model, consumption and saving are positively related to disposable income. When disposable income ($Y_d$) decreases, with the identity $Y_d = C+S$, both consumption ($C$) and saving ($S$) will decrease since there is less income available overall for both activities.

Answer:

C. decrease both their consumption and saving.