An increase in the price level will shift the aggregate demand curve:

The permanent-income hypothesis can reconcile the cross-section and time-series consumption studies by incorporating the reasonable assumption that at any one time many people are poor because they have ________ transitory income, causing them to

have an unusually ________ saving ratio. A) positive, high B) positive, low C) negative, high D) negative, low

Suppose real GDP is $800 billion when the MPC is 0.80, and people decide to increase their saving by $30 billion. Before this change, the economy was in equilibrium with people intending to save $100 billion and producers intending to invest $100 billion. The new equilibrium level of real GDP is:

a. $600 billion. b. $650 billion. c. $680 billion. d. $730 billion. e. $800 billion.