If consumers become pessimistic, the economy is likely to experience a
A) negative demand shock.
B) positive demand shock.
C) negative supply shock.
D) positive supply shock.

Question

Quizplus · Accepted Answer

When consumers become pessimistic, they tend to reduce their spending, leading to a decrease in demand for goods and services. This can result in a negative demand shock, which can have adverse effects on the economy, such as reduced production, lower employment, and decreased economic growth.

If Consumers Become Pessimistic, the Economy Is Likely to Experience