Use left and right arrow to change slide in that direction whenever canvas is selected.
Slide 1

This graph shows an equilibrium, E0, at a price level of P0 and an output of Y0.

What do you think will happen to the AD curve when there is a decrease in consumer confidence or business confidence?

A graph is shown, with Real GDP on the x axis and Price Level on the y axis.  There is a curve marked AD0 and an intersecting curve marked SRAS.  The intersection of these two curves is labeled E0.  A vertical line on the right is marked LRAS.

A decrease in consumer confidence or business confidence can shift AD to the left, from AD0 to AD1.

What do you think this will do to the equilibrium point?  Go to the next slide to find out.

A graph is shown, with Real GDP on the x axis and Price Level on the y axis.  There is a curve marked AD0 and an intersecting curve marked SRAS.  Another curve to the left is labeled AD1.