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Elena L [17]
4 years ago
5

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

History
2 answers:
Lilit [14]4 years ago
8 0

C. By adding to its discretionary spending budget- Apex

AlexFokin [52]4 years ago
4 0

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, <u>a discretionary spending budget can be implemented. Investing public money would boost aggregate demand levels and create job positions.</u> 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, <u>the economy will start to grow again. </u>

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