Suppose consumers spend more than usual. In the short run, output will _____; in the long run, output will _____ from its starting point.
A) increase; remain unchanged
B) increase; increase
C) remain unchanged; decrease
D) remain unchanged; increase

Question

Quizplus · Accepted Answer

In the short run, increased consumer spending leads to higher demand, causing output to increase. In the long run, output returns to its natural level due to factors like price adjustments and resource reallocation, leaving it unchanged from its starting point.

Suppose Consumers Spend More Than Usual