Suppose the U.S. was to experience a series of terrorists' attacks aimed at keeping consumers away from large shopping areas. Suppose further that the primary effect is for consumer confidence to decrease, this would likely
A)increase aggregate demand.
B)increase aggregate supply.
C)decrease aggregate demand.
D)decrease aggregate supply.

Question

Quizplus · Accepted Answer

A decrease in consumer confidence would lead to a decrease in aggregate demand because consumers will be less willing to spend money on goods and services, which would lead to a decrease in economic activity. This would, in turn, lead to a decrease in aggregate demand.