People expect their incomes will decrease next year. As a result, the_________ will shift __________.
A) aggregate demand curve; rightward
B) long-run aggregate supply curve; rightward
C) short-run aggregate supply curve; rightward
D) aggregate demand curve; leftward

Question

Quizplus · Accepted Answer

When people expect their incomes to decrease, they will likely reduce their spending and savings, which will result in a decrease in aggregate demand. Therefore, the aggregate demand curve will shift leftward.

People Expect Their Incomes Will Decrease Next Year