Scenario 14-2

Multiple Choice

Scenario 14-2. The economy is in long-run equilibrium. Suddenly, due to corporate scandals, international tensions, and the loss of confidence among policymakers, citizens become pessimistic concerning the future. They maintain this level of pessimism for a long time.
-Refer to Scenario 14-2. Initially, which curve shifts in which direction?

A) AD shifts right.
B) AD shifts left.
C) Short-run AS shifts left.
D) Short-run AS shifts right.