A decrease in consumers' confidence in banks would lead to _____ in the velocity of money and result in the AD curve shifting to the _____.
A) an increase;left
B) an increase;right
C) a decrease;left
D) a decrease;right

Question

Quizplus · Accepted Answer

A decrease in consumers' confidence in banks would likely lead to a decrease in the velocity of money, as people might hold onto their cash rather than depositing it in banks or spending it. This decrease in spending would lead to a decrease in aggregate demand, hence shifting the AD curve to the left.

A Decrease in Consumers' Confidence in Banks Would Lead to _____