Which of the following actions could cause a recession?

Multiple choice question.

An increase in aggregate demand

An increase in government spending

A decrease in investment spending

An increase in aggregate supply

1 answer

A recession is typically characterized by a decline in economic activity, which can be influenced by various factors. Among the options provided, the action that could cause a recession is:

A decrease in investment spending.

Decreased investment spending can lead to lower overall demand in the economy, which may ultimately result in a recession as businesses cut back on production and may lay off workers. Other options listed, such as an increase in aggregate demand or government spending, usually have the potential to stimulate economic activity rather than cause a recession. An increase in aggregate supply would generally lead to economic growth as well.