If there is a significant drop in business optimism in an economy
A)the economy's long-run aggregate supply curve shifts to the right.
B)the economy's aggregate demand curve shifts to the left.
C)the labor supply in the economy increases in the long run.
D)the capital stock in the economy increases in the long run.

Question

Quizplus · Accepted Answer

If there is a significant drop in business optimism, it means that businesses are projecting lower demand for their goods and services in the future. This will lead to a decrease in investment and hiring, which will shift the economy's aggregate demand curve to the left.

If There Is a Significant Drop in Business Optimism in an Economy