The global financial panic in September 2008 that led to a sharp fall in business investment spending and consumer spending can be viewed as:
A)a sharp decrease in aggregate supply.
B)a sharp decrease in aggregate demand.
C)a sharp decrease in both aggregate supply and aggregate demand.
D)a modest increase in aggregate supply.
E)a modest increase in both aggregate demand and aggregate supply.

Question

Quizplus · Accepted Answer

The global financial panic led to a sharp fall in business investment spending and consumer spending, indicating a decrease in aggregate demand. This was further exacerbated by the tightening of credit markets, which led to a decrease in the availability of credit for businesses and individuals, reducing their ability to spend.

The Global Financial Panic in September 2008 That Led to a Sharp