How was the financial crisis in the U.S. transmitted to the macro economy?
A) Dramatic falls in consumer and firm confidence.
B) Large increases in the interest rates at which consumers and firms borrow.
C) Many financial institutions become insolvent.
D) Both A and B.
E) Both B and C.

Question

Quizplus · Accepted Answer

The financial crisis was transmitted to the macroeconomy through dramatic falls in consumer and firm confidence, leading to reduced spending and investment, and large increases in borrowing interest rates, which further discouraged spending and investment by consumers and firms.

How Was the Financial Crisis in the U