Figure 12-2
-Refer to Figure 12-2.If the U.S.economy is currently at point N,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

Figure 12-2 
-Refer to Figure 12-2.If the U.S.economy is currently at point N,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 a typical economic model (like the Aggregate Demand and Supply model) suggests a decrease in the overall economic activity or a shift towards lower output and higher unemployment. This can be caused by a decrease in consumer confidence, such as when households expect future income to decline, leading to reduced spending and economic contraction.

Figure 12-2 -Refer to Figure 12-2.If the U.S.economy Is Currently at Point