Questions: In 2009, during the height of the U.S. financial crisis, real GDP fell 3.5 percent and the Consumer Price Index fell from 215.3 to 214.9. Was this recession likely caused by a shift in aggregate demand or aggregate supply? This recession was likely caused by (Click to select) v.

The recession in 2009 was likely caused by a shift in aggregate demand.

Explanation:

1. Real GDP Decline: A 3.5 percent fall in real GDP indicates a significant reduction in economic output. This is often associated with a decrease in aggregate demand, as lower demand for goods and services leads to reduced production and economic activity.

2. Consumer Price Index (CPI) Decrease: The slight decrease in the Consumer Price Index from 215.3 to 214.9 suggests a reduction in the overall price level. This is consistent with a decrease in aggregate demand, as lower demand can lead to downward pressure on prices.

3. Context of the Financial Crisis: The 2009 recession was part of the broader financial crisis, which was characterized by a collapse in financial markets, reduced consumer and business confidence, and a tightening of credit conditions. These factors are more aligned with a demand-side shock, as they directly impact consumers' and businesses' ability to spend and invest.

In summary, the combination of a decline in real GDP and a decrease in the CPI during the 2009 recession suggests that it was likely caused by a shift in aggregate demand rather than aggregate supply.