Choose the staternent that is incorrect. O A. Changes in consumption expenditure

Question

Choose the staternent that is incorrect. O A. Changes in consumption expenditure change aggregate demand, but with no change in the money wage rate O B. An increase in business investment increases short-run aggregate supply but with no change in consumption O C. An increase in business investment is a signal that businesses are anticipating future economic growth, and O D. Consumption expenditure is the largest component of GDP so a small percentage change in consumption he economy fluctuates around potential GDP in the business cycle. expenditure, the economy fluctuates around potential GDP in the business cycle. as the rest of the economy responds, aggregate demand increases by more than the increase in business investment. expenditure has a relatively large effect on real GDP Click to select your answer

Explanation / Answer

The option B is incorrect.

An increase in business investment increases short-run aggregate supply but with the increase in the former, savings decreases which implies consumption rises.

Related Questions

Navigate

• Browse (All)
• Browse C
• Subjects

---