Question

For this scenario dealing with aggregate demand, does it cause a movement along the curve or a shift in the curve? Explain your response e

Q: Several European economies go into recession.

Answer 1

A recession causing a decrease in aggregate demand leads to a shift in the curve to the left.

Step-by-step explanation:

In the scenario where several European economies go into recession, it would cause a shift in the aggregate demand curve. Aggregate demand represents the total amount of goods and services demanded in an economy at any given price level. A recession leads to a decrease in consumer spending, investment, and net exports, which results in a decrease in aggregate demand. This shift is represented by a movement of the aggregate demand curve to the left.