Downward swing of Aggregate Demand (AD) line is described as :
Answer & explanation
Correct answer: option 4
The correct answer is option (4) : Paradox of Thrift
The downward swing of the Aggregate Demand (AD) line is often associated with the Paradox of Thrift. This paradox suggests that when individuals increase their savings in an attempt to be more financially responsible during economic downturns, it can collectively lead to a decrease in aggregate demand, further deepening the economic slump.