Recall the Application about falling oil prices and their effect on the U.S. economy to answer the following question(s).
-According to this Application, why did the recent decrease in oil prices have only a modest effect on economic growth?
A) Consumers may have saved the money that resulted from lower gasoline prices.
B) There was less incentive to produce energy and invest in new capital and equipment.
C) Government spending decreased significantly.
D) Both A and B are correct.

Question

Quizplus · Accepted Answer

The decrease in oil prices had a relatively small impact on economic growth due to the combination of lower consumer spending habits and less incentive to produce energy and invest in new capital and equipment. While consumers may have saved money from the lower gasoline prices, this decrease in demand for energy investments may have offset the positive impact of increased consumer spending.

Recall the Application About Falling Oil Prices and Their Effect