When disposable income increases, saving will A) not change. ...

[maegan_martin]

When disposable income increases, saving will
 
  A) not change.
  B) increase, and the supply of loanable funds curve shifts rightward.
  C) decrease, and there is a movement downward along the supply of loanable funds curve.
  D) increase, and there is a movement upward along the supply of loanable funds curve.
  E) decrease, and the supply of loanable funds curve shifts leftward.

Question 2

Define stagflation and explain how it can be created.
 
  What will be an ideal response?

[vkodali]

Answer to Question 1

B

Answer to Question 2

Stagflation is a combination of two words: stagnation and inflation. Stagnation means real GDP is below the full employment level and falling, that is, the economy is in recession while at the same time the price level is rising, that is, the economy is experiencing inflation. An increase in the price of a major resource that decreases aggregate supply can trigger stagflation.

[maegan_martin]

Excellent

[kishoreddi]

Gracias!