People expect their incomes will decrease next year. As a result, the ________ will shift ________.
A) short-run aggregate supply curve; rightward
B) aggregate demand curve; rightward
C) aggregate demand curve; leftward
D) long-run aggregate supply curve; rightward

Question

Quizplus · Accepted Answer

When people expect their incomes to decrease, they are likely to reduce their spending, which leads to a decrease in aggregate demand. This is represented by a leftward shift of the aggregate demand curve.

People Expect Their Incomes Will Decrease Next Year