JNU SIS 2018 Question 26: AD-AS model

Consider a short-run complete macro model as specified by the following equations :

I. $Y = Y(N, \overline{K})$, where $Y$ is aggregate output, $N$ labour and $\overline{K}$ capital

II. $P\,\dfrac{\partial Y}{\partial N} = w(N)$ for $N < N_f$, where RHS is Keynesian labour supply function and $N_f$ is the full-employment level of labour

III. $S(Y, r, \alpha) = I(Y, r, \beta)$ where $r$ is interest rate, $\alpha$ and $\beta$ are shift parameters reflecting autonomous propensity to save and autonomous inducement to invest and $S$ and $I$ are the savings and investment functions, respectively

IV. $\overline{M}^s = M^{dt}(PY) + M^{ds}(r)$, where $\overline{M}^s$ is constant money supply, $M^{dt}$ is transactions demand for money function and $M^{ds}$ is speculative demand for money function

An autonomous rise in the propensity to save ($\alpha$) will lead to