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Why can't poor people help boost the economy during an economic depression? lack resources ivings to spend. They receive too much government aid. They have low investment returns. Powerful people are ther help them.

Question

Why can't poor people help boost the economy during an economic depression? lack resources ivings to spend. They receive too much government aid. They have low investment returns. Powerful people are ther help them.

Why can't poor people help boost the economy during an economic depression?
lack resources
ivings to spend.
They receive too much
government aid.
They have low
investment returns.
Powerful
people are ther
help them.

Solution

expert verifiedExpert Verified
4.3(308 Voting)
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ReginaldProfessional · Tutor for 6 years

Answer

###Lack resources/savings to spend.

Explain

##Step 1: Understanding Cyclical Unemployment<br />###During an economic depression, cyclical unemployment rises, meaning people lose jobs due to reduced economic activity.<br /><br />##Step 2: Impact on Low-Income Individuals<br />###Low-income individuals are disproportionately affected by cyclical unemployment, as they often hold jobs most vulnerable to economic downturns. This loss of income severely restricts their spending power.<br /><br />##Step 3: Limited Resources and Savings<br />###Poor individuals typically have limited savings and resources to fall back on during periods of unemployment. This further restricts their ability to contribute to consumer spending, a key driver of economic recovery.<br /><br />##Step 4: The Role of Fiscal Policy and Automatic Stabilizers<br />###Automatic stabilizers, such as unemployment benefits, provide a safety net for those who lose their jobs. While these benefits help mitigate the severity of the downturn for individuals, the overall spending power of low-income individuals is still significantly reduced compared to pre-recession levels. This limits their ability to boost the economy.<br /><br />#
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