Viewed through the aggregate expenditures model,the U.S.recession of 2007-2009 resulted mainly from:
A) a fall in the average propensity to save.
B) insufficient aggregate expenditures.
C) reduced government spending.
D) increased taxes.

Question

Quizplus · Accepted Answer

The U.S. recession of 2007-2009 resulted mainly from insufficient aggregate expenditures. This means that total spending in the economy was not enough to support production and employment levels. This can result from various factors, such as a decline in consumer confidence, a decrease in investment by firms, or a decrease in government spending. However, in this case, reduced government spending and increased taxes were not the main causes of the recession. Similarly, a fall in the average propensity to save might affect aggregate expenditures, but it is not the main reason for the recession.

Viewed Through the Aggregate Expenditures Model,the U