Firms suddenly becoming pessimistic about future business prospects is an example of a ______ demand shock, which would shift the AD curve to the ______.
A)negative; left
B)positive; left
C)negative; right
D)positive; right

Question

Quizplus · Accepted Answer

A negative demand shock occurs when firms become pessimistic about future business prospects, leading to reduced investment and spending, which shifts the aggregate demand (AD) curve to the left.

Firms Suddenly Becoming Pessimistic About Future Business Prospects Is an Example