Suppose that the town of Canes attracts a
new factory that has a payroll of one million dollars.
All employees of the factory live in Canes and the
factory buys no other resources in town. Each person in
Canes spends one third of his income in town. By how much
will the equilibrium level of Canesian income
A decline in expected disposable
increases consumption because it
shifts the consumption schedule upward.
increases consumption because people
move upward along a given consumption schedule.
decreases consumption because it
shifts the consumption schedule downward.
decreases consumption because people
move downward along a given consumption