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Quiz
Related Lesson
Game of Theories: The Great Recession
Knowledge Check
Knowledge Check
Question 1 of 4
According to the Keynesians, which of the following is a reason aggregate demand fell in 2008?
a.
The bursting of the housing bubble meant consumers had to pay more in mortgages, and so had less money to spend. This caused consumer spending to drop.
b.
The housing bubble encouraged banks to make bad loans. Entrepreneurs responded by saving these loans instead of investing them, causing investment to drop.
c.
Unemployment and lower income, resulting from a drop in consumer spending and investment, meant governments took in less in tax revenue. This caused government spending to drop.
d.
b and c only.
Check Answer
Related Courses
Course
Principles of Macroeconomics
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