Figure 13-1 -Refer to Figure 13-1.Ceteris paribus,a decrease in firms' expectations of the future profitability of investment spending 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

Quizplus · Accepted Answer

A decrease in firms' expectations of future profitability of investment spending would cause a decrease in investment spending, shifting the AD curve to the left. This is represented by a movement from AD₂ to AD₁.

Figure 13-1 -Refer to Figure 13-1.Ceteris Paribus,a Decrease in Firms' Expectations of Firms