The short-run effect of consumers becoming more pessimistic will be for the

A. aggregate demand curve to shift down.

B. short-run and long-run aggregate supply curves to shift right.

C. aggregate demand curve to shift up.

D. short-run aggregate supply curve to shift left.

The correct answer is option A.

Explanation:

In case the consumers have a pessimistic tendency towards the future, they would expect the economy to face a downturn. They will, as a result, save their income and wealth for the future.

This would cause a decline in consumer spending and the aggregate demand curve will move down to the left.

An increase in consumer confidence, on the other hand, would cause consumer spending and aggregate demand to increase.