The disruption to financial markets starting in August 2007 that caused both consumer and business spending to fall
A)shifted the aggregate demand curve to the right.
B)shifted the aggregate demand curve to the left.
C)shifted the aggregate supply curve to the right.
D)shifted the aggregate supply curve to the left.

Question

Quizplus · Accepted Answer

The disruption to financial markets that started in August 2007, commonly known as the Global Financial Crisis, caused both consumer and business spending to fall. This decrease in spending would result in a shift of the aggregate demand (AD) curve to the left, as there is less demand for goods and services in the economy. As a result, prices and output will decrease, leading to a higher level of unemployment in the economy.

The Disruption to Financial Markets Starting in August 2007 That