ontent LibraryAssessments CommunicationResources Design FirstMini2018 Time Left

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ontent LibraryAssessments CommunicationResources Design FirstMini2018 Time Left 38:27 Madison Walker: Attempt 1 Question 30 (2 points) Wages dividends, interest rent = $500 Wages, dividends, interest, rent $500 Factor markets Households Consumer Firms $400 Taxes Goods and $100services markets Imports $30 purchases of Exports Rest of wornd Govemment goods and $30 $100 Reference: Ref 7(22+1 Figure 7-1 Circular Flow Model (Figure 7-1: Circular-Flow Model)lUse Figure 7-1: Circular-Flow Model. If the circular-flow model is in equilibrium (the sum of money flowing into each box is equal to the sum of the money flowing out of it) and there is a decrease in consumer spending, holding everything else constant, which outcome is likely to occur? a) an increase in real GDP b) an increase in the unemployment rate c) an increase in nominal GDP d) an increase in the inflation rate ved Save

Explanation / Answer

The correct option is An increase in the unemployment rate. Because of the decrease in consumption spending, less output will be produced. There is less demand for output so labor for producing the output will be reduced which will lead to increase in unemployment rate.

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