If the only spending in the economy were household spending based on earned income, and if households always spent all of their incomes, from one year to the next the level of economic activity would:

Question

Quizplus · Accepted Answer

If households always spent all of their incomes and there were no other forms of spending in the economy, the level of economic activity would not change from one year to the next, assuming no changes in income or other external factors. This is because the total spending (and thus total income) in the economy would remain constant.

If the Only Spending in the Economy Were Household Spending