For a given level of inflation, if a stock market crash makes consumers less willing to spend (the wealth effect), then the _____ shifts _____.
A)aggregate demand curve; right
B)aggregate demand curve; left
C)short-run aggregate supply line; upward
D)short-run aggregate supply line; downward

Question

Quizplus · Accepted Answer

A stock market crash leads to a decrease in consumer wealth, which in turn reduces consumer spending, leading to a leftward shift in the aggregate demand curve.

For a Given Level of Inflation, If a Stock Market