Which of the following likely occurs when households and firms become more pessimistic?
A)increased spending
B)increased aggregate demand
C)increased real GDP
D)an increase in the unemployment rate

Question

Quizplus · Accepted Answer

When households and firms become more pessimistic, they tend to reduce their spending which can lead to a decrease in aggregate demand. This reduction in demand can result in a decrease in production and sales, ultimately leading to an increase in the unemployment rate.

Which of the Following Likely Occurs When Households and Firms