Question

The country Paranoia receives word of an imminent penguin attack. The news causes expectations about the future to be shaken. As a consequence, there is a sharp decline in investment plans, which in turn lead to..."

a) Increased consumer spending
b) A surge in government investment
c) Reduced economic growth
d) Expansion of the manufacturing sector

Answer 1

The news of an imminent penguin attack in Paranoia can lead to a decline in investment plans, resulting in reduced economic growth.

Step-by-step explanation:

When a country such as Paranoia receives word of an imminent penguin attack, it creates uncertainty about the future. This uncertainty can lead to a decline in investment plans by businesses. Since investment plays a crucial role in driving economic growth, the reduction in investment plans can cause a reduced economic growth in the country.