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What were the two ways that lower housing prices led to a drop in aggregate demand at the start of the Great Recession of 2010?
What were the two ways that lower housing prices led to a drop in aggregate demand at the start of the Great Recession of 2010? Group of answer choices The interest rate effect because interest rates fell when people bought fewer houses and higher taxes as people had fewer tax deductions with cheaper houses. Businesses figured lower housing prices meant lower prices for their products too, so they cut investment, and the government raised taxes to make up for the loss in revenue from lower house prices. Laid off housing construction workers spent less and a drop in spending by homeowners because of the wealth effect. The foreign price effect because other country's houses did not change in price and lower housing prices led to lower stock prices
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