Can you help with an econ question and explain?
If the economy is in equilibrium, it can be argued that:
a) the state budget is balanced;
b) Budgets at all levels must be balanced;
c) consumer spending should be equal to investment;
d) any increase in consumer spending will lead to an inflationary gap
e) firms' income should be equal to gross investment;
f) all previous answers are incorrect.
- OiyLv 62 months ago
The answer is d. The increase in consumer spending will move AD to the right more than the potential level. So it will cause inflation.