Use the Following to Answer Questions

question 191

Multiple Choice

Use the following to answer questions:
-(Figure 7-1: Circular-Flow Model) Use Figure 7-1: Circular-Flow Model. If the circular-flow model is in equilibrium (the sum of money flowing into each box is equal to the sum of the money flowing out of it) and there is a decrease in consumer spending, holding everything else constant, which outcome is likely to occur?

• A) an increase in nominal GDP
• B) an increase in real GDP
• C) an increase in the unemployment rate
• D) an increase in the inflation rate

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Definitions:

Power Costs

The expenses incurred by a company for the electricity or energy used in its operations.

Sales Price

The amount of money for which a product or service is sold to the customer.

Contribution Margin

The amount by which sales revenue exceeds variable costs, contributing to covering fixed costs and profit generation.

Fixed Costs

Expenses that do not change with the level of production or sales activities within a short time frame, such as rent, salaries, and insurance.