Question

During the Great Recession, consumer sentiment in the United States declined, leading to a decrease in consumer spending. Which of the following factors caused this decrease in consumer sentiment?

	a.	an increase in tax rates
	b.	a decrease in expected income
	c.	a decrease in the money supply
	d.	an increase in household wealth
	e.	falling gasoline prices

During the Great Depression, aggregate demand in the U.S. economy decreased. As a result, the unemployment rate _________ and the price level _________.

	a.	remained unchanged; remained unchanged
	b.	increased; remained unchanged
	c.	decreased; increased
	d.	remained unchanged; increased
	e.	increased; decreased

An increase in ________________ would lead to an increase in long-run economic growth.

	a.	imports and exports
	b.	prices and interest rates
	c.	resources and technology
	d.	government taxes and fees
	e.	consumer spending and borrowing

Answer 1

1. A decrease in expected income bevabec of reduction in asset price lead a fall in consumer sentiment.

So, the correct answer is an option ( b).

2. During the great depression, aggregate demand in the US economy decreased. As a result unemployment rate increase, and the price level decreased.

So, the correct answer is an option ( e).

3. An increase in resources and technology would lead to an increase in long run economic growth

So, the correct answer is an option (c).