Assuming an upward-sloping AS curve,if an economy is at full employment and investment spending decreases while all other levels of spending remaining constant,then
A)A GDP gap emerges.
B)The price level increases.
C)Output increases.
D)The unemployment rate falls.

Question

Quizplus · Accepted Answer

A decrease in investment spending will lead to a decrease in aggregate demand, causing a GDP gap as the economy moves below full employment output.

Assuming an Upward-Sloping AS Curve,if an Economy Is at Full