In the model of aggregate demand and aggregate supply, the initial impact of an increase in consumer optimism is to ?
Correct answer: B. shift the aggregate demand curve to the right
- A. shift the short-run aggregate supply curve to the left
- B. shift the aggregate demand curve to the right
- C. shift the short-run aggregate supply curve to the right
- D. shift the aggregate demand curve to the left
Explanation
Greater consumer optimism encourages households to increase consumption at each price level, shifting aggregate demand to the right. It initially raises planned spending rather than directly changing firms’ production costs or short-run aggregate supply.
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