Expectation of a recession lead to a recession

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How can the expectation of a recession lead to a recession?

When people expect recession, they fear spending and thus resulting in reduced investment and declining aggregate demand (AD).This is because reduced spending implies the firms which invested are suffering losses and may quit the business. The level of employment would then soar as investments decline thus resulting in recession.

Regarding question four, why would a little inflation in an economy be viewed as a good thing vs. deflation?

Reference no: EM132231642

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