You would expect economic activity to decrease if investment spending, spending from borrowing and transfer payments, government purchases, and exports were:
A) equal to saving, taxes, and imports.
B) less than saving, taxes, and imports.
C) greater than saving, taxes, and imports.
D) increasing, and saving, taxes, and imports were decreasing.

Question

Quizplus · Accepted Answer

When investment spending, spending from borrowing and transfer payments, government purchases, and exports are less than saving, taxes, and imports, it indicates that more money is being saved or leaving the economy than is being spent or invested within it. This imbalance typically leads to a decrease in economic activity, as there is less demand for goods and services.

You Would Expect Economic Activity to Decrease If Investment Spending