(Consider This) in the Mainstream View, the Severe Recession of 2007-2009

question 248

Multiple Choice

(Consider This) In the mainstream view, the severe recession of 2007-2009 was caused by

• A) an aggregate-supply shock, which caused the AS curve to shift left.
• B) a financial crisis that caused a shrinkage in investment and consumption spending, thereby reducing aggregate demand.
• C) monetary factors, specifically the excessive expansion of money supply brought about by the Federal Reserve, starting in the recession of 2001.
• D) a huge and sudden drop in the velocity of money, causing a significant reduction in both nominal and real GDP.

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Definitions:

Total Utility

The overall satisfaction or benefit a consumer receives from consuming a certain quantity of a good or service.

Marginal Utility

The additional satisfaction or utility that a consumer receives from consuming an additional unit of a good or service.

Total Utility

In economics, the total satisfaction received from consuming a particular quantity of goods or services.

Consumer Surplus

The difference between the total amount that consumers are willing and able to pay for a good or service and the total amount that they actually pay.