Question

ow can injections affect an economy? Check all that apply.

They can lead to a sudden downturn in an economy.
They can help an economy remain strong and stable.
They can increase the wages that employees receive.
They can provide more revenue so businesses can expand.
They can result in the government earning more money in taxes.
They can lead to a fall in consumer demand for goods and services.

Answer 1

Select the statements that apply to macroeconomic "injections" (investment, government spending, exports):

Apply:
- They can help an economy remain strong and stable.
(Injections raise aggregate demand and national income, supporting output and employment.)
- They can increase the wages that employees receive.
(Higher demand for goods and labour can push up employment and wage pressures.)
- They can provide more revenue so businesses can expand.
(Greater demand raises firm revenues and profits, enabling reinvestment.)
- They can result in the government earning more money in taxes.
(Higher incomes and spending boost tax receipts via the multiplier effect.)

Do not apply:
- They can lead to a sudden downturn in an economy.
(Injections are expansionary; downturns are typically caused by leakages or negative shocks.)
- They can lead to a fall in consumer demand for goods and services.
(Injections increase, not reduce, aggregate demand.)