Question

Assuming an upward-sloping AS curve, if an economy is at full employment and consumption spending decreases while all other levels of spending remaining constant, then Question 7 options: A) Inventory levels are less than desired until a new equilibrium is reached. B) Any GDP gap disappears. C) Increased unemployment results. D) Changes in consumption spending have no impact on GDP

Answer 1

Answer:

C) Increased unemployment results.

When consumption spending decreasing the equilibrium amount of quantity of goods and services being traded will decline, which means that there will be less demand for labor and the economy will not be at its full employment.

Explanation: