Why are healthy individual finances important to the overall economy in North America?

• A. They guarantee that all citizens will achieve equal wealth.
• B. They eliminate the risk of inflation in the economy.
• C. They reduce the need for government regulation in financial markets.
• D. They increase consumer spending, which drives economic growth.

Answer: (D)

Verified step by step guidance

1. Understand the role of individual finances in the economy: Healthy individual finances mean that people have sufficient income, savings, and access to credit to meet their needs and make purchases.
2. Recognize the connection between individual finances and consumer spending: When individuals have good financial health, they are more likely to spend money on goods and services, which is a major component of aggregate demand in the economy.
3. Link consumer spending to economic growth: Increased consumer spending stimulates production, encourages businesses to invest and hire more workers, and thus drives overall economic growth.
4. Evaluate the incorrect options: Equal wealth is not guaranteed by individual finances; inflation is influenced by many factors beyond individual finances; and government regulation depends on market conditions, not solely on individual financial health.
5. Conclude that healthy individual finances are important because they increase consumer spending, which in turn supports economic growth in North America.