(Figure: Expectations 0) in the Figure, What Is the Cause

question 83

Multiple Choice

(Figure: Expectations 0) In the figure, what is the cause of the movement from point b to c?

• A) positive demand shock
• B) negative demand shock
• C) self-correcting mechanism
• D) inflation expectations

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Definitions:

Investment Spending

Expenditures on new physical capital, such as buildings, machinery, and equipment, intended to increase future production.

Great Depression

A severe worldwide economic depression that took place during the 1930s, marked by high unemployment and financial instability.

Future Business Activity

Predictions or estimations about the levels of commercial, industrial, or professional operations and engagements in the upcoming period.

Keynesian Model

An economic theory stating that active government intervention is necessary to manage economic fluctuations and stimulate demand during downturns.