During the 2007-2009 recession, the consumers in the U.S. economy:
a. consumed less and saved more resulting in a decline in aggregate demand.
b. saved less and consumed more resulting in a decline in aggregate demand.
c. consumed and saved more resulting in an increase in aggregate demand.
d. consumed and saved less resulting in an increase in aggregate demand.
a
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Jay set up his hot dog stand near the business district. His total variable cost includes the
A) annual insurance for the hot dog stand. B) cost of buying the hot dog stand. C) cost of the hot dogs and condiments. D) interest he pays on the funds he borrowed to pay for advertising. E) revenue he gets when he sells his first hot dog each day.
Suppose that when disposable income increases by $2,000, consumption spending increases by $1,500. Given this information, we know that the marginal propensity to consume (MPC) is
A) .25. B) .75. C) $1,000/$750 = 1.33. D) 1/.25 = 4.