If total spending rises from one year to the next, then a. the economy must be producing a larger output of goods and services. b. goods and services must be selling at higher prices. c. either the economy must be producing a larger output of goods and services, or goods and services must be selling at higher prices, or both.

Question

Business

Greyson Khan

2 July, 19:29

If total spending rises from one year to the next, then a. the economy must be producing a larger output of goods and services. b. goods and services must be selling at higher prices. c. either the economy must be producing a larger output of goods and services, or goods and services must be selling at higher prices, or both.

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Answers (1)

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Schmidt · Answer 1

The correct answer is option c.

Explanation:

A rise in total spending can mean several things. An increase in the production of goods and services is likely to cause an increase in consumption and hence spending.

An increase in the price of existing goods and services may lead to an increase in spending.

As more money will be required now to purchase the same level of goods and services

Or both the reasons can apply.