A sudden shortage of liquidity during a financial crisis will shift the ________ curve to the ________.
A) AS; right
B) AS; left
C) AD; right
D) AD; left

Question

Quizplus · Accepted Answer

During a financial crisis, there is a sudden shortage of liquidity which means that it becomes difficult to access cash or cash equivalents. This leads to a decrease in consumer spending and business investments. As a result, the aggregate demand curve shifts to the left, reflecting a decrease in overall demand for goods and services.

A Sudden Shortage of Liquidity During a Financial Crisis Will