Use the following to answer questions:
Figure: AD-AS Model II
-(Figure: AD-AS Model II) Refer to Figure: AD-AS Model II. When consumers and firms become more optimistic, in the short run the _____ curve will shift to the _____.
A) SRAS; left
B) SRAS; right
C) AD; right
D) AD; left

Question

Use the following to answer questions:
Figure: AD-AS Model II 
-(Figure: AD-AS Model II) Refer to Figure: AD-AS Model II. When consumers and firms become more optimistic, in the short run the _____ curve will shift to the _____.
A) SRAS; left 
B) SRAS; right 
C) AD; right 
D) AD; left

Quizplus · Accepted Answer

When consumers and firms become more optimistic, they are likely to spend and invest more, respectively. This increase in spending and investment shifts the Aggregate Demand (AD) curve to the right in the short run, reflecting higher demand for goods and services at every price level.

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