When Households Decrease Consumption Spending, Which of the Following Is

question 17

Multiple Choice

When households decrease consumption spending, which of the following is likely to occur?

• A) The overall level of economic activity in the circular flow of income will remain unchanged.
• B) Firms will increase the level of investment in capital equipment and assets.
• C) Firms will employ more factors of production in an attempt to stimulate household spending.
• D) Firms will decrease their demand for the factors of production from households.

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