Question

Producers believe the economy is headed for a recession, so they reduce their purchases of machinery and equipment.

A. The Short Run Aggregate Supply curve shifts to the right.
B. The Aggregate Demand curve shifts to the left.
C. The Aggregate Demand curve shifts to the right.
D. The Short Run Aggregate Supply curve shifts to the left.

Answer 1

A - The Short Run Aggregate Supply curve shifts to the right.

Step-by-step explanation:

The Short Run Aggregate Supply curve plots aggreagrate price against aggreagrate quantity.

If producers believe a recession is imminent and they reduce the amount of machinery purchased, the quantity supplied would reduce shifting the Short Run Aggregate Supply curve to the left.

I hope I was able to help you.