How would the government most likely respond to a decrease in consumer spending?

A. By raising interest rates

B. By decreasing the money supply

C. By adding to its discretionary spending budget

D. By raising income taxes

Question

Aliyah Mclean

History

27 October, 15:29

How would the government most likely respond to a decrease in consumer spending?

A. By raising interest rates

B. By decreasing the money supply

C. By adding to its discretionary spending budget

D. By raising income taxes

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Answers (2)

Know the Answer?

Giovanni Cortez · Answer 1

The correct answer is C.

A decrease in consumer spending means a decrease in the aggregate demand levels and, in consequence, in total output and in the employment figures. Therefore, the economy is experiencing a contraction.

In order to reverse the trend, a discretionary spending budget can be implemented. Investing public money would boost aggregate demand levels and create job positions. These new workers will start to earn a salary, increase their income available and start to demand more goods and service, therefore expanding aggregate demand even further. Therefore, the economy will start to grow again.

Rosa · Answer 2

C. By adding to its discretionary spending budget - Apex

How would the government most likely respond to a decrease in consumer spending?A. By raising interest ratesB. By decreasing the money supplyC. By adding to its discretionary spending budgetD. By raising income taxes

How would the government most likely respond to a decrease in consumer spending?

A. By raising interest rates

B. By decreasing the money supply

C. By adding to its discretionary spending budget

D. By raising income taxes