10
lesson pretestMultiple Choice

Pretest

Question 10 • CMS 2026-2027 Economics and Personal Finance CREDIT RECOVERY

Which best describes the nature of cause and effect in the context of the business cycle?

Answer
A
A recession begins, causing consumers to spend more.
B
Goods are overproduced, causing a surplus in jobs.
C
Consumers spend less, causing worker layoffs.
D
Demand falls, causing production to stay at its peak.

Explanation

When consumers spend less, businesses sell fewer goods and services and may need fewer workers, leading to layoffs. This is a cause-and-effect relationship associated with an economic downturn. Falling demand would not keep production at its peak, overproduction creates a surplus of goods rather than jobs, and recessions usually cause consumers to spend less, not more.

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