If Firms' Expectations About the Future Become Pessimistic So That

question 5

Multiple Choice

If firms' expectations about the future become pessimistic so that they think future profits will be lower, then

• A) the quantity of real GDP demanded decreases, and there is a movement up along the AD curve.
• B) aggregate demand decreases and the AD curve shifts leftward.
• C) aggregate demand increases and the AD curve shifts rightward.
• D) the aggregate demand curve does not shift, but potential GDP decreases.
• E) the quantity of real GDP demanded increases, and there is a movement down along the AD curve.

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