The 2008-2009 recession began as oil prices increased, and then was followed by a negative demand shock

Based on our understanding of the paradox of saving, we know that a reduction in the desire to save will cause

A) an increase in equilibrium GDP. B) a reduction in GDP. C) an increase in the desire to invest. D) no change in equilibrium GDP. E) a permanent reduction in the level of saving.

The sharp rise in the debt-to-GDP ratio in 2008-2009

a. was exclusively automatic due to the effect of declining income on government outlays and tax revenues. b. was exclusively due to an aggressive fiscal policy. c. was exclusively due to military expenditures. d. was partly automatic due to the effect of declining income on government outlays and tax revenues, and partly due to an aggressive fiscal policy. e. was exclusively due to foreign aid expenditures.