Suppose consumers and business decision makers become more optimistic about the future, and aggregate expenditures increase. The most likely result is that:
A) real GDP and employment and income to decline.
B) real GDP and employment rise.
C) real GDP rises and employment falls.
D) real GDP falls and employment rises.

Question

Quizplus · Accepted Answer

An increase in aggregate expenditures indicates a rise in demand for goods and services, which usually spurs businesses to produce more. In turn, this higher production requires more labor, which leads to an increase in employment. The increase in production and employment typically leads to an increase in real GDP, as more goods and services are being produced and sold.

Suppose Consumers and Business Decision Makers Become More Optimistic About