If an economy's GDP falls,then it must be the case that the economy's
A)income falls and saving rises.
B)income and saving both fall.
C)income falls and expenditure rises.
D)income and expenditure both fall.

Question

Quizplus · Accepted Answer

GDP measures the total value of goods and services produced in an economy. Therefore, when GDP falls, it indicates a reduction in economic activity, which translates to lower income for firms and individuals. As a result, both income and expenditure will fall as people spend less due to lower income. Saving may or may not rise depending on the individual's preference and economic conditions.

If an Economy's GDP Falls,then It Must Be the Case