In 2008-2009, which of the following weakened the demand stimulus effects of expansionary fiscal policy?
A) the unwillingness of the federal government to run budget deficits
B) the heavy indebtedness of American households
C) a high level of household spending on big-ticket items such as houses and cars, which do not promote economic growth
D) the continuation of the high saving rates on the part of Americans

Question

Quizplus · Accepted Answer

The heavy indebtedness of American households meant that even with fiscal stimulus, consumers were more focused on paying down debt rather than increasing spending, which weakened the demand stimulus effects.

In 2008-2009, Which of the Following Weakened the Demand Stimulus