In the above figure, what could cause the shift of aggregate demand from AD1 to AD2?
A) depletion of raw materials
B) an increase in input prices
C) a decrease in consumer confidence
D) an increase in international trade barriers

Question

Quizplus · Accepted Answer

A decrease in consumer confidence would cause consumers to reduce their spending, leading to a decrease in aggregate demand. This shift would cause the AD curve to shift leftward from AD1 to AD2. Depletion of raw materials, an increase in input prices, and an increase in international trade barriers would all increase production costs and decrease supply, shifting the AS curve leftward. This would cause a simultaneous decrease in output and increase in prices, resulting in a leftward shift in the aggregate supply curve, not the aggregate demand curve.

In the Above Figure, What Could Cause the Shift of Aggregate