Question

During the Great Recession, consumer sentiment in the United States declined, leading to a decrease in...

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

Homework Answers

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).

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