Which of the following is one reason for the decline in aggregate demand that led to the recession of 2007-2009?
A)falling oil prices
B)increases in housing prices
C)the financial crisis
D)a decline in government spending

Question

Quizplus · Accepted Answer

The financial crisis, specifically the collapse of housing markets and the subsequent failure of major financial institutions, led to a loss of confidence and a decrease in spending and investment, contributing to the decline in aggregate demand that triggered the recession.

Answer: D 
 A decline in government spending can also contribute to a decrease in aggregate demand, as less government spending means less money is being injected into the economy, potentially leading to job losses and reduced consumer spending. However, this was not the primary cause of the recession of 2007-2009, which was largely driven by the financial crisis.

Which of the Following Is One Reason for the Decline