Within the Framework of the AD/AS Model, If Consumers and Investors

question 167

Multiple Choice

Within the framework of the AD/AS model, if consumers and investors become more pessimistic about the future direction of the economy, this will lead to

• A) an increase in aggregate demand.
• B) a decrease in aggregate demand.
• C) an increase in long-run aggregate supply (LRAS shifts to the right).
• D) a reduction in the natural rate of unemployment.

---

Definitions:

Past

The period of time or a segment of history that has already occurred, distinguished from the present and future.

Social-Responsibility Norm

A societal expectation that people will help those who are dependent upon them or in need of assistance.

Expectation

A belief or anticipation about the way events, behaviors, or things are supposed to be.

Help

Assistance or support given to someone else in order to alleviate their situation or solve a problem.