Refer to Figure 9.2 for the following questions.
Figure 9.2

-If the economy is currently at point N in Figure 9.2, which of the following could cause it to move to point K?
A)households expect future income to decline
B)household wealth rises
C)the firm's cash flow rises as profits rise
D)government expenditures increase

Question

Refer to Figure 9.2 for the following questions.
Figure 9.2
 
-If the economy is currently at point N in Figure 9.2, which of the following could cause it to move to point K?
A)households expect future income to decline 
B)household wealth rises 
C)the firm's cash flow rises as profits rise 
D)government expenditures increase

Quizplus · Accepted Answer

Moving from point N to point K in an economic context typically represents a contraction or a decrease in economic activity. If households expect their future income to decline, they are likely to save more and spend less, leading to a decrease in consumption. This reduction in consumption can cause the economy to contract, moving it from point N to point K.

Refer to Figure 9.2 for the Following Questions