Which of the following would help restore output to its original level following a fall in the investment? Select one correct answerGroup of answer choicesA tightening of credit conditionsAn increase in target wealthA reduction in autonomous consumptionAn increase in actual wealth
Question
Which of the following would help restore output to its original level following a fall in the investment? Select one correct answerGroup of answer choicesA tightening of credit conditionsAn increase in target wealthA reduction in autonomous consumptionAn increase in actual wealth
Solution
An increase in actual wealth would help restore output to its original level following a fall in the investment. This is because when people's actual wealth increases, they tend to spend more, which can stimulate the economy and increase output.
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