Starting from Potential Output, If Consumer Confidence Decreases and Consumers

question 43

Multiple Choice

Starting from potential output, if consumer confidence decreases and consumers decide to spend less, then this will shift the ______ curve to the left and generate ______.

• A)aggregate demand; a recessionary output gap
• B)aggregate supply; a recessionary output gap
• C)aggregate demand; an expansionary output gap
• D)aggregate supply; an expansionary output gap