What do you think the consequences might be in financial markets if individuals consumed more of their incomes and thereby reduced the supply of funds available to financial institutions?  

 

If individuals consume more,

▼ 

a. more

b. fewer

 

dollars will be available for investment. This would

▼

 

a. increase

b. reduce

 

the amount of money available for new projects and drive

▼

 

a. down

b. up

 

the required return (i.e., required return of investors to buy bonds). Over time, employment, salaries, and gross domestic product would

▼

a. rise

b. decline