AP Macroeconomics Question 435: Answer and Explanation

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Question: 435

10. Which of the following is true of a typical contraction of the business cycle?

  • A. Consumption is falling, but household wealth is rising.
  • B. Consumption is increasing.
  • C. Private investment is rising.
  • D. Employment and inflation are low.
  • E. Private saving rates are rising.

Correct Answer: D


D-Weak AD (contraction) causes job loss and low inflation rates.