As world economies start to recover from the 2008 financial crisis and firms expect profits to increase
A) the price level in the U.S. will decrease as firms increase investment.
B) the U.S. short-run aggregate supply curve immediately will shift rightward.
C) investment will increase and there will be a movement up along the aggregate demand curve.
D) both investment and aggregate demand will increase.

Question

Quizplus · Accepted Answer

As firms expect profits to increase, they are likely to invest more, which directly increases aggregate demand. This is because higher investment spending contributes to the overall demand in the economy.

As World Economies Start to Recover from the 2008 Financial