A Permanent Reduction in Investment Spending Leads to

question 96

Multiple Choice

A permanent reduction in investment spending leads to

• A)a more than proportional increase in real national income.
• B)a more than proportional decrease in real national income.
• C)a less than proportional decrease in real national income.
• D)a proportional decrease in real national income.

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Definitions:

Price Increase

A rise in the cost of goods or services, which can be influenced by factors such as inflation, demand, or production costs.

Indifference Curve

A graph representing combinations of two goods that give a consumer equal satisfaction and utility.

Total Utility

Total utility is the total satisfaction or benefit a consumer receives from consuming a given total quantity of a good or service.

Indifference Map

A graph representing a set of indifference curves to illustrate consumer preferences for different combinations of goods, assuming equal satisfaction.