Question

If consumer confidence decreases then aggregate demand will

A. increase and output and price level will increase as well.
B. decrease and output and price level will decrease as well.
C. increase and output will increase but price level will decrease.
D. increase and output will decrease but price level will increase.
E. decrease and output will decrease but price level will increase.

Answer 1

decrease and output and price levels will decrease as well.

If we graph it, we can see that the decrease in aggregate demand (shift left) will cause the equilibrium output and price to decrease.

Step-by-step explanation:

Answer 2

e) decrease and output will decrease but price level will increase

Step-by-step explanation:

if consumers are not confident in a product, the aggregates will see the consumer response and lose their confidence, but the company wants to make money, but they see that the product is not as wanted, so they increase the price but don’t make as much of it