Increased uncertainty and pessimism about the future of the economy decreases investment spending, shifting aggregate demand to the left.

Question

Quizplus · Accepted Answer

When businesses and consumers become uncertain about the future of the economy, they tend to become more cautious with their spending and investment decisions. This can lead to a decrease in investment spending, which is a component of aggregate demand. As a result, aggregate demand shifts to the left, representing a decrease in overall spending in the economy.

Increased Uncertainty and Pessimism About the Future of the Economy