Which of the following likely occurs when households and firms become more pessimistic?
A)increased spending,increased aggregate demand,rising real GDP,and a rising unemployment rate
B)decreased spending,increased aggregate demand,rising real GDP,and a falling unemployment rate
C)decreased spending,decreased aggregate demand,falling real GDP,and a rising unemployment rate
D)decreased spending,decreased aggregate demand,falling real GDP,and a falling unemployment rate

Question

Quizplus · Accepted Answer

When households and firms become more pessimistic, they tend to decrease their spending, which leads to a decrease in aggregate demand. As a result, there is a fall in real GDP and a rise in unemployment rate.

Which of the Following Likely Occurs When Households and Firms