Question

When household debt as a share of income is abnormally high,

a. rapid growth of consumption is likely to lead the recovery.



b. the growth prospects of the economy will be excellent because high household debt is the key to a strong economy.



c. consumers will be in a strong position to deal with irregular expenses.



d. the growth of consumption is likely to remain sluggish even as the economy begins to recover?

Answer 1

The correct answer is letter "D": the growth of consumption is likely to remain sluggish even as the economy begins to recover.

Step-by-step explanation:

If in an economy the household debt increases it is typically caused because of long-term investments like mortgage payments. As a result, the amount of disposable money of the households will decreases which will cause consumption in the overall market will move slowly, regardless the economy is recovering or not.