In 2019, South Africa's consumer confidence index dipped sharply. Ceteris paribus, which of the graphs shows the correct effect on aggregate demand?

A)Figure A
B)Figure B
C)Figure C
D)Figure D

Question

In 2019, South Africa's consumer confidence index dipped sharply. Ceteris paribus, which of the graphs shows the correct effect on aggregate demand?

A)Figure A 
B)Figure B 
C)Figure C 
D)Figure D

Quizplus · Accepted Answer

A decrease in consumer confidence will lead to a decrease in consumer spending, which will shift the aggregate demand curve leftward. Figure B shows a leftward shift of the AD curve.

In 2019, South Africa's Consumer Confidence Index Dipped Sharply