The Figure Given Below Represents the Circular Flow of Income

question 93

Multiple Choice

The figure given below represents the circular flow of income between households, firms, financial intermediaries, and foreign countries.
Figure 4.2

-Refer to Figure 4.2. Suppose households reduce saving to $7,000. Everything else held constant, consumption spending must now be:

• A) $18,000.
• B) $22,500.
• C) $28,000.
• D) $32,000.
• E) $38,000.

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Definitions:

Multilateralism

A foreign policy approach involving multiple countries working together on a given issue, promoting collective action.

Unilateralism

A foreign policy approach where a country acts independently and without the agreement or cooperation of other countries.

Expansion Theory

The idea that territories and nations should expand their dominion for economic gain, security, or national prestige.

Cold War

A period of geopolitical tension between the Soviet Union and the United States and their respective allies, characterized by threats, propaganda, and other measures short of open warfare, from about 1947 to 1991.