There has been a decrease in investment.As a result,real GDP will ________ in the short run,and ________ in the long run.
A)increase; increase further
B)increase; decrease to its initial value
C)decrease; decrease further
D)decrease; increase to its initial level

Question

Quizplus · Accepted Answer

In the short run, a decrease in investment leads to a decrease in real GDP due to reduced spending. In the long run, economies tend to adjust and return to their potential output, meaning real GDP will increase back to its initial level as markets and prices adapt.

There Has Been a Decrease in Investment