Which of the following contributed to the weak recovery from the 2008-2009 recession?
A) The restrictive monetary policy followed by the Fed.
B) Government spending was increased by only a small amount.
C) The temporary nature of the tax rebates and spending increases created uncertainty and exerted only a weak impact on aggregate demand.
D) The budget deficits were too small to exert much impact on aggregate demand, output, and employment.

Question

Quizplus · Accepted Answer

The temporary nature of tax rebates and spending increases created uncertainty and exerted only a weak impact on aggregate demand. This means that people were uncertain about how long the rebates and spending increases would last, which made it difficult for them to make long-term decisions regarding their spending and investment. This uncertainty destabilized the market and prevented a strong recovery from the recession.

Which of the Following Contributed to the Weak Recovery from the 2008-2009