The recession of 2007-2009 happened in part because, after the housing bubble burst in 2006, the ensuing financial crisis:
A)made it difficult for government to finance deficit spending.
B)led to widespread inflation.
C)increased the level of uncertainty about the future.
D)shifted the PAE line upward.

Question

Quizplus · Accepted Answer

When the housing bubble burst, many homeowners lost value in their biggest asset. This caused uncertainty about the future and subsequently reduced spending.

The Recession of 2007-2009 Happened in Part Because, After the Housing