According to the theory of new classical economics, if business sentiment and investment spending decrease

According to the theory of new classical economics, if business sentiment and investment spending decrease, the aggregate demand curve _______ , the price level falls, and aggregate output _______

shifts right; decreases

shifts right; increases

shifts left; remains constant

shifts left; decreases

Solutions

Expert Solution

Ans.- (C)

if business sentiment and investment spending decrease,then AD curve shifts to the left. But we know that AS curve is vertical so aggregate output remains constant.

Rahul Sunny answered 1 year ago

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