Suppose businesses in general believe that the economy is likely to head into recession and so they reduce capital purchases.Their reaction would initially shift
A)aggregate demand right.
B)aggregate demand left.
C)aggregate supply right.
D)aggregate supply left.

Question

Quizplus · Accepted Answer

If businesses reduce capital purchases due to the expectation of an economic recession, it represents a decrease in planned investment, which is a component of aggregate demand. As a result, the aggregate demand curve will shift leftward.

Suppose Businesses in General Believe That the Economy Is Likely