In the U.S., consumer expenditures on homes and big ticket items tend to slacken during recessions because ________.
A) the consumers generally have a low debt-to-income ratio
B) of steady supply of loanable funds in the economy during recession
C) the consumers have a high debt-to-income ratio
D) consumer borrowing increases during recession
E) of stringent credit policies adopted by the Fed before the onset of recession

Question

Quizplus · Accepted Answer

Consumers tend to have a higher debt-to-income ratio during recessions, which means they are more likely to have existing debts and may be less willing or able to take on more debt by purchasing big ticket items or homes. This leads to a slackening of consumer expenditures on these items during recessions.

In the US, Consumer Expenditures on Homes and Big Ticket Items Tend