A recession is most commonly caused by:
A)an increase in aggregate demand.
B)a decrease in aggregate demand.
C)an increase in aggregate supply.
D)a decrease in aggregate supply.

Question

A recession is most commonly caused by:
A)​an increase in aggregate demand.
B)​a decrease in aggregate demand.
C)​an increase in aggregate supply.
D)​a decrease in aggregate supply.

Quizplus · Accepted Answer

A decrease in aggregate demand, which can be caused by factors such as high interest rates, a decrease in consumer confidence, or a decrease in government spending, is the most common cause of a recession. When demand for goods and services decreases, businesses produce less and often lay off workers, leading to a decrease in overall economic activity.

A Recession Is Most Commonly Caused By