Final answer:
A recession can be caused by a decrease in aggregate demand, which leads to a decline in production, employment, and economic activity. Therefore, the correct option is D.
Step-by-step explanation:
A recession can be caused by a decrease in aggregate demand. When aggregate demand decreases, there is less demand for goods and services, which can lead to a decline in production, employment, and economic activity.
For example, if consumers start spending less on goods and services due to a decrease in confidence or income, this reduces aggregate demand and can contribute to a recession. Similarly, a decrease in government spending or a decrease in investment can also lower aggregate demand and lead to a recession.
It's important to note that recessions can have multiple causes and are often influenced by a combination of factors, including those mentioned in the question. However, a decrease in aggregate demand is a commonly recognized cause of recessions.