A Decrease in the Willingness or Ability of Banks to Lend

Multiple Choice

A decrease in the willingness or ability of banks to lend has a significant impact on the economy because

A) it causes the short-run aggregate supply curve to shift to the left.
B) it causes the short-run aggregate supply curve to shift to the right.
C) some borrowers from banks are unable to borrow from nonmoney markets.
D) bank profits decline and employment in the banking sector contracts.