Which government action will shift the aggregate demand left?
A) a decrease in taxes
B) a decrease in the money supply
C) signing a free trade agreement
D) repealing an import tariff

Question

Quizplus · Accepted Answer

A decrease in the money supply will shift the aggregate demand curve leftward. This is because a decrease in the money supply means that there is less money available for spending, leading to a decrease in overall spending and therefore, a decrease in aggregate demand. Alternatively, an increase in taxes, signing a free trade agreement, and repealing an import tariff are all actions that would shift the aggregate demand curve rightward, increasing overall spending and thus, aggregate demand.

Which Government Action Will Shift the Aggregate Demand Left