1-In the short run, a decrease in investment spending causes output to _________

Question

1-In the short run, a decrease in investment spending causes output to ___________ and the unemployment rate to ___________.

a. increase; increase

b. increase; decrease

c. decrease; increase

d. decrease; decrease

2-In the short run, a decrease in consumption spending causes output to _______________and the unemployment rate to ______________.

a. increase; decrease

b. decrease; increase

c. increase; increase

d. decrease; decrease

3-In the short run, an increase in consumption spending causes output to ______________ and the unemployment rate to ______________.

a. decrease; decrease

b. increase; increase

c. decrease; increase

d. increase; decrease

4-In the short run, an increase in the money supply causes the price level and inflation to ________________.

a. decrease

b. increase

c. not change

d. decrease or not change

5-In the short run, an increase in government spending causes output to _____________and the unemployment rate to ______________.

a. increase; increase

b. decrease; decrease

c. increase; decrease

d. decrease; increase

a. increase; increase

b. increase; decrease

c. decrease; increase

d. decrease; decrease

Explanation / Answer

1. The right answer is option C. decrease, increase.

Explanation: With the decrease in investment, the firm will reduce production and hire less number of laborers.

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