The stimulus package that the government implemented during the Great Recession of 2007-09 did not have as strong an impact on GDP and unemployment as expected, for the following reasons, except:
A) Very high debt levels of households
B) Consumers raised their saving rates
C) The stimulus package caused prices to fall in many sectors
D) The effects of the stimulus package were diffuse and spread thinly among many sectors

Question

Quizplus · Accepted Answer

Options A, B, and D are valid reasons for why the stimulus package did not have a strong impact on GDP and unemployment. However, option C is not correct because falling prices in many sectors would be a positive effect of the stimulus package, as it would increase the purchasing power of consumers and businesses. Therefore, option C cannot explain why the stimulus package did not have a strong impact on GDP and unemployment.

The Stimulus Package That the Government Implemented During the Great