Suppose prices in the United States are expected to decline in the future. The effect today is likely to:
A)shift the AD curve to the left.
B)shift the AD curve to the right.
C)make the AD curve flatter.
D)make the AD curve steeper.

Question

Quizplus · Accepted Answer

If prices in the United States are expected to decline in the future, consumers and businesses might delay purchases and investments in anticipation of lower prices. This would decrease the current demand for goods and services, shifting the Aggregate Demand (AD) curve to the left.

Suppose Prices in the United States Are Expected to Decline