The expectation of:
A) lower future prices can lead to demand-pull inflationary pressure now.
B) good economic conditions in the future makes it difficult to recover from a recession.
C) an upcoming recession can lead to an increase in the saving leakage and a decrease in the level of economic activity.
D) an upcoming recession can lead to an increase in current personal consumption expenditures which will reduce employment in the future.

Question

Quizplus · Accepted Answer

Expectations of an upcoming recession can lead to increased savings as individuals and businesses become more cautious with their spending. This behavior, known as the saving leakage, reduces the overall level of economic activity because less money is being circulated through purchases and investments.

The Expectation Of