Which of the following is most likely to happen if the aggregate demand curve for an economy (which was initially in equilibrium) shifts to the left, aggregate supply remaining unchanged?
A) The equilibrium real GDP will decrease.
B) The equilibrium price level in the economy will increase.
C) The aggregate supply curve will shift rightward.
D) The aggregate supply curve will shift leftward.
E) The economy will experience an expansion.

Question

Quizplus · Accepted Answer

If the aggregate demand curve shifts to the left while aggregate supply remains unchanged, the equilibrium point will shift to a lower level of both real GDP and price level. This means that there will be a decrease in the quantity of goods and services demanded, leading to lower output and income in the economy. Therefore, option A is the correct answer. Option B is incorrect because a decrease in aggregate demand will lead to a decrease in the equilibrium price level, not an increase. Option C and D are incorrect because there is no information provided that suggests a change in the aggregate supply curve. Option E is incorrect because a decrease in aggregate demand implies a contractionary phase of the business cycle, not an expansion.

Which of the Following Is Most Likely to Happen If