If the Economy Is at Potential Output and Consumption Spending

question 6

Multiple Choice

If the economy is at potential output and consumption spending suddenly decreases because of a fall in consumer confidence, the appropriate fiscal policy is:

• A) a decrease in government transfers.
• B) an increase in government spending.
• C) a decrease in government spending.
• D) an increase in the money supply to decrease interest rates.

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Definitions:

Selling Online

The process of marketing and distributing products or services through the internet to consumers.

Customers Online

Individuals who purchase goods or services over the internet.

Increase Sales

An action or strategy aimed to sell more products or services, thereby generating higher revenue.

Interest Groups

Organizations formed by individuals sharing a common interest or goal to influence public policy or opinion.