During an economic contraction, housing and stock prices generally
A) fall, leading to a reduction in aggregate demand.
B) fall, leading to an increase in aggregate demand.
C) rise, leading to a reduction in aggregate demand.
D) rise, leading to an increase in aggregate demand.

Question

Quizplus · Accepted Answer

During an economic contraction, both housing and stock prices tend to fall. This decrease in wealth and consumer spending can lead to a reduction in aggregate demand, as people are less likely to spend money on goods and services.

During an Economic Contraction, Housing and Stock Prices Generally