Figure 15-1

-Refer to Figure 15-1.Ceteris paribus,a decrease in households' expectations of their future income would be represented by a movement from
A) AD₁ to AD₂.
B) AD₂ to AD₁.
C) point A to point B.
D) point B to point A.

Question

Figure 15-1
 
-Refer to Figure 15-1.Ceteris paribus,a decrease in households' expectations of their future income would be represented by a movement from
A) AD₁ to AD₂. 
B) AD₂ to AD₁. 
C) point A to point B. 
D) point B to point A.

Quizplus · Accepted Answer

A decrease in households' expectations of their future income would shift the aggregate demand curve to the left from AD₁ to AD₂, representing a decrease in overall demand in the economy. Therefore, the correct choice is B, as it represents the movement from AD₂ to AD₁.

Figure 15-1 -Refer to Figure 15-1.Ceteris Paribus,a Decrease in Households' Expectations of in Households