Final answer:
Decreased investor confidence, sparked by negative reports about a company or economic indicators, can reduce profitability by discouraging consumer spending and investment, shifting Aggregate Demand leftward, and affecting GDP and price levels.
Step-by-step explanation:
With the release of negative information about a firm, the factor that might adversely affect profitability is B) Decreased investor confidence. Negative reports, such as those concerning home prices or consumer confidence, can make individuals feel that their wealth has diminished or lead them to be pessimistic about the future. This can result in a decrease in consumer spending, a shift in Aggregate Demand (AD) to the left, and ultimately a reduction in Gross Domestic Product (GDP) and the price level. Conversely, a positive report could lead to increased spending and economic growth. In addition, firms facing enhanced market competitiveness due to competition from those offering better or cheaper products might experience a reduction in profits, which could also negatively impact investor confidence. Lastly, increased consumer trust and positive public perception are not likely to be outcomes of negative information about a firm.