Question

How does consumer spending stimulate economic growth? Consumer spending pays funds directly into households. Consumer spending increases withdrawals from an economy. Consumer spending allows firms to flourish and new businesses to develop. Consumer spending prevents a factor that can be an obstacle to production.
THE ANSWER IS C!

Answer 1

Answer:

• Consumer spending allows firms to flourish and new businesses to develop.

Explanation:

Suppliers and consumers are the two agents of an economy that  keep a constant and dynamic activity that is mutually dependent.

Suppliers are the agents who provide the goods and services.

Consumers are the agents who purchase and use those goods and services.

When consumers purchase a good or service, they pay and the money ends up in the accounts of  the suppliers (except for taxes). The more the consumers buy the more the suppliers can invest (in the same or other business), the more can produce, the more can hire more employees, the more,  in turn, can purchase more raw material from other suppliers, . . . all of this is economic growth.

Hence, as the third statement correctly asserts, the consumer spending  allows firms to flourish and new businesses to develop.

Answer 2

Answer:

C) Consumer spending allows firms to flourish and new businesses to develop.