There is disagreement among economists over whether the "wealth effect" or a "debt overhang" is the primary reason that financial disasters lead to recessions. Each explanation suggests that a different government policy should be followed. If the wealth effect causes financial crises to lead to recessions, then policy makers should concentrate on

Choose one:

A.stopping households from borrowing so much.

B.decreasing infrastructure spending at the beginning of the recession.

C.more thoroughly regulating banks.

D.keeping asset bubbles from becoming too large.

Part 2(1point)

On the other hand, if debt overhang is the primary reason that financial disasters lead to recessions, then government policy makers should concentrate on

Choose one:

A.decreasing infrastructure spending at the beginning of the recession.

B.keeping asset bubbles from becoming too large.

C.more thoroughly regulating banks.

D.stopping households from borrowing so much.