A decline in government spending causes consumption to decline.

Question

Quizplus · Accepted Answer

When government spending declines, it could lead to a decrease in the purchasing power of individuals, which in turn could cause consumption to decline. This is because people would have less disposable income available to spend on goods and services. Additionally, government spending can have a multiplier effect on the economy, so a decrease in government spending could lead to a decrease in overall demand for goods and services.

A Decline in Government Spending Causes Consumption to Decline