If consumers become pessimistic, the economy is likely to experience a:
A) Negative demand shock
B) Positive demand shock
C) Negative supply shock
D) Positive supply shock

Question

Quizplus · Accepted Answer

If consumers become pessimistic, they are likely to reduce their spending, which leads to a decrease in demand for goods and services. This decrease in demand creates a negative demand shock, which can have a ripple effect throughout the economy, leading to decreased production, job loss, and further reduction in consumer spending.

If Consumers Become Pessimistic, the Economy Is Likely to Experience