If aggregate expenditures equal $7,600 and aggregate income equals $8,000, businesses will produce
A) more, raising both employment and income.
B) less, lowering both employment and income.
C) more, raising employment and lowering income.
D) less, lowering employment and raising income.

Question

Quizplus · Accepted Answer

When aggregate expenditures are less than aggregate income, it indicates that the demand for goods and services is lower than what is being produced. As a result, businesses will likely reduce production to match the lower level of spending, which can lead to a decrease in employment and income as they adjust to the reduced demand.

If Aggregate Expenditures Equal $7,600 and Aggregate Income Equals $8,000