how do people rational decions often lead to an economic downturn? give examples please?

Answer 1

When people think their incomes will decrease or they might lose their jobs, they cut back on spending. If enough people feel this way aggregate demand falls and the economy slows. This is why consumer confidence surveys are used as an indicator of future economic performance.

Answer 2

Short selling stocks during a market collapse. Rational decision (profit-making), leading to an acceleration of an economic downturn.