Which of the following best explains what happens when consumers think the economy is struggling? A. People spend more, businesses produce less, and unemployment rises.
B. People spend more, businesses produce a lot, and unemployment is low.
C. People spend less, businesses produce too much, and unemployment is low.
D. People spend less, businesses produce less, and unemployment rises.
The correct answer is D. People spend less, businesses produce less, and unemployment rises.
When consumers believe the economy is struggling, they tend to reduce their spending because they are uncertain about their financial future. As a result, businesses may lower their production levels to avoid excess inventory, and this reduction can lead to layoffs or hiring freezes, causing unemployment to rise. This creates a cycle that further impacts the economy negatively. If you have more questions or need further clarification, feel free to ask!