Which of the following would most likely reduce aggregate demand (shift the AD curve to the left)?
A) A reduced amount of excess capacity.
B) Increased government spending on military equipment.
C) An appreciation of the U.S.dollar.
D) Increased consumer optimism regarding future economic conditions.

Question

Quizplus · Accepted Answer

An appreciation of the U.S. dollar makes exports more expensive for other countries, which leads to a decrease in exports and an increase in imports. This results in a decrease in net exports and a decrease in aggregate demand.

Which of the Following Would Most Likely Reduce Aggregate Demand