Debt overhang often causes a recession because businesses and consumers with a _____ level of debt _____ their spending.
A)low; increase
B)low; decrease
C)high; increase
D)high; decrease

Question

Quizplus · Accepted Answer

When businesses or consumers are burdened with high levels of debt, they are more likely to cut back on their spending, which can decrease demand in the economy and potentially lead to a recession. This is because they are trying to reduce their debt burden and may need to prioritize paying off their debts over spending on other goods and services.

Debt Overhang Often Causes a Recession Because Businesses and Consumers