If Firms Decide to Decrease Their Purchases of U

question 120

Multiple Choice

If firms decide to decrease their purchases of U.S.-produced goods,

• A)the decrease in investment will have no effect on U.S.income or consumption.
• B)the decrease in investment will cause U.S.income to increase, which will cause consumption to increase.
• C)the decrease in investment will cause U.S.income to decrease, which will cause consumption to decrease.
• D)real GDP will increase by the same amount that investment spending decreased.
• E)real GDP will decrease by the same amount that investment spending decreased.

---

Definitions:

Personal Assets

Items of value owned by an individual, including tangible property like real estate and cars, as well as intangible assets such as investments.

Unlimited Liability

The legal responsibility of business owners to bear the full extent of their company's debts or obligations, potentially requiring them to sell personal assets to cover business debts.

General Partners

Individuals who jointly own and manage a partnership, assuming full liability for the partnership's debts and obligations.

Tenancy in Partnership

A form of co-ownership where partners in a business have rights to use property owned by the partnership.