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

question 74

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 third round through the circular flow?

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

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Definitions:

Short-Term Profits

Short-term profits are earnings realized from business operations or investments over a brief period, typically within a fiscal quarter or year, focusing on immediate financial gain.

Corporate Social Responsibility Pyramid

outlines the hierarchical levels of responsibility a corporation holds towards society, including economic, legal, ethical, and philanthropic.

Philanthropic

Pertaining to the act of giving money, goods, time, or effort to support a charitable cause, often with a focus on improving human well-being.

Global Corporate Responsibility

The practice where businesses consider the social, environmental, and economic impacts of their operations globally and commit to act in an ethical and sustainable manner.