In the mainstream view, the severe recession of 2007-2009 was caused by
A)an aggregate-supply shock, which caused the AS curve to shift left.
B)a financial crisis that caused a shrinkage in investment and consumption spending, thereby reducing aggregate demand.
C)monetary factors, specifically the excessive expansion of money supply brought about by the Federal Reserve, starting in the recession of 2001.
D)a huge and sudden drop in the velocity of money, causing a significant reduction in both nominal and real GDP.

Question

Quizplus · Accepted Answer

The mainstream view attributes the 2007-2009 recession primarily to a financial crisis that led to reduced investment and consumption, decreasing aggregate demand.

In the Mainstream View, the Severe Recession of 2007-2009 Was