Suppose Consumer Confidence Declines and as a Result,consumer Spending Decreases

question 80

Multiple Choice

Suppose consumer confidence declines and as a result,consumer spending decreases by $4 billion dollars.Other things equal,if households spend $0.75 of each extra dollar of income and save the remaining $0.25,by how much will spending decrease during the second round through the circular flow?

• A) $1 billion
• B) $2.25 billion
• C) $3 billion
• D) $4 billion

---

Definitions:

United States

A federal republic in North America, comprised of 50 states, a federal district, five territories, and various possessions.

Legal Memorandum

A document written by an attorney or paralegal presenting research, analysis, and legal arguments related to a specific legal issue or case.

Internal Legal

Pertaining to or within the legal processes, decisions, or documents of an organization or institution.

Components

Individual parts or elements that collectively form a system, machine, or piece of equipment.