Why Are the 1990s Sometimes Referred to as Japan's "Lost

question 2

Multiple Choice

Why are the 1990s sometimes referred to as Japan's "lost decade"?

• A)Similar to the Great Depression in the U.S. ,Japan's unemployment remained at double-digit levels throughout the 1990s.
• B)The Japanese were reluctant to use fiscal policy to stimulate aggregate demand,which would have prompted an economic recovery.
• C)Following the stock market crash of 1990,GDP was persistently weak throughout the decade,only growing at a rate of about 1 percent.
• D)Despite the strong economic growth during the decade,stock market prices have not recovered.

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Definitions:

Aggregate Demand

The total demand for all goods and services in an economy at a given time and price level.

Classical Economists

were early economic thinkers of the 18th and 19th centuries who believed in the power of free markets to regulate themselves through the laws of supply and demand.

Great Depression

A severe worldwide economic downturn that took place during the 1930s, marked by widespread unemployment, deflation, and a significant decline in economic activity.

Full Employment

An economic scenario where every available workforce is employed in the most financially efficient method.