Increased uncertainty and pessimism about the future of the economy leads firms to desire less investment spending which shifts the aggregate-demand curve to the left.

Question

Quizplus · Accepted Answer

Uncertainty and pessimism can lead firms to reduce their investment spending, which ultimately reduces overall demand in the economy. This shift in investment behavior can cause a leftward shift in the aggregate-demand curve.

Increased Uncertainty and Pessimism About the Future of the Economy