1
$\begingroup$

Credit used for investment purposes can lead to an increase in total spending and an increase in total output, with the possibility of the total output increasing either more or less than the total spending.

As a consequence, the economy may suffer from....

a) Inflation

b) Recession

c) Modest economic swings

d) A&B

$\endgroup$

1 Answer 1

0
$\begingroup$

no,

c) is not correct because the question literally states that the output will increase. When we talk about economic swings we mean economy going back and forth between recession and expansion.

d) is not correct. It requires both a) and b) to be correct at the same time. b) is not correct because the question already states that economy will grow. The question is just whether more or less than spending. Recession is typically defined as period of economic decline.

$\endgroup$
3
  • $\begingroup$ Wouldn't the economic swings be a proper answer because they said that the total output has the possibility to increase more or less than the output? $\endgroup$ Commented May 19 at 18:04
  • $\begingroup$ @youssefashraf no because it’s still increasing. As I explained in my answer typically by swing we mean output switching from negative to positive growth. Also in this case there is no fluctuation at all we just don’t know if the increase in output will be more or less than the spending but it will be just one of them $\endgroup$
    – 1muflon1
    Commented May 19 at 19:34
  • $\begingroup$ Understood, thank you for your help $\endgroup$ Commented May 20 at 20:11

Not the answer you're looking for? Browse other questions tagged or ask your own question.