Which of the following shows the correct sequence of events from an initial shock to consumption and the resulting multiplier effects?

A. Investment declines, firms' revenue rises, labor demand shifts right, unemployment falls, asset prices fall, and the multiplier effects continue their cycle.
B. Consumption declines, firms' revenue falls, labor demand shifts left, unemployment rises, and the multiplier effects continue their cycle.
C. Consumption declines, firms' revenue falls, labor demand shifts right, unemployment falls, and the multiplier effects continue their cycle.
D. Investment declines, firms' revenue falls, labor demand shifts left, unemployment rises, asset prices rise, and multiplier effects continue their cycle.

Question

12-12-2022
Business

contestada

Which of the following shows the correct sequence of events from an initial shock to consumption and the resulting multiplier effects?

A. Investment declines, firms' revenue rises, labor demand shifts right, unemployment falls, asset prices fall, and the multiplier effects continue their cycle.
B. Consumption declines, firms' revenue falls, labor demand shifts left, unemployment rises, and the multiplier effects continue their cycle.
C. Consumption declines, firms' revenue falls, labor demand shifts right, unemployment falls, and the multiplier effects continue their cycle.
D. Investment declines, firms' revenue falls, labor demand shifts left, unemployment rises, asset prices rise, and multiplier effects continue their cycle.

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topeadeniran2 topeadeniran2 · Answer 1 · 2022-12-16T13:20:57+01:00

The option that shows the correct sequence of events from an initial shock to consumption and the resulting multiplier effects is B. Consumption declines, firms' revenue falls, labor demand shifts left, unemployment rises, and the multiplier effects continue their cycle.

What's consumption?

Utilizing resources to fulfill present needs and desires is referred to as consumption. In contrast, investing entails making purchases in order to generate future income. A key concept in economics, consumption is also explored in many other social sciences.

Because one agent's spending is also another agent's income, the multiplier effect results. For instance, when a spending project generates new jobs, it adds to the circular flow of income and demand in the nation.

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