Which of the following is likely to increase household bankruptcies?
A) A decrease in aggregate consumption
B) An increase in aggregate investment
C) An increase in government purchases
D) A decrease in unemployment

Question

Quizplus · Accepted Answer

A decrease in aggregate consumption means that households are spending less money overall. This can lead to a decrease in income for businesses, which can in turn lead to layoffs and higher unemployment rates. When households have less income and higher unemployment, they may struggle to pay their debts and ultimately file for bankruptcy.

Which of the Following Is Likely to Increase Household Bankruptcies