AP Macroeconomics Question 435: Answer and Explanation
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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.