In which case can we be sure aggregate demand shifts left overall?
A)people want to save more for retirement and the Fed increases the money supply.
B)people want to save more for retirement and the Fed decreases the money supply.
C)people want to save less for retirement and the Fed increases the money supply.
D)people want to save less for retirement and the Fed decreases the money supply.

Question

Quizplus · Accepted Answer

When people want to save more for retirement, they will spend less on current goods and services, causing aggregate demand to shift leftward. Additionally, if the Fed decreases the money supply, it will further reduce aggregate demand and shift it leftward. Therefore, the combination of people saving more and the Fed decreasing the money supply will surely result in a leftward shift in aggregate demand.

In Which Case Can We Be Sure Aggregate Demand Shifts