A recession often begins with a(n)________ in spending by firms on capital goods and a(n)________ in spending on durable goods by households.
A)increase; decrease
B)increase; increase
C)decrease; increase
D)decrease; decrease

Question

Quizplus · Accepted Answer

A recession typically starts with a decrease in spending by firms on capital goods, as they anticipate lower future demand and thus cut back on investments. Similarly, households tend to reduce spending on durable goods, which are often more expensive and can be postponed, as a response to economic uncertainty or actual declines in income.

A Recession Often Begins with A(n)________ in Spending by Firms