Contractionary monetary policy makes the aggregate demand curve
A) shift to the left.
B) become flatter.
C) become steeper.
D) shift to the right.
E) remain static.

Question

Quizplus · Accepted Answer

Contractionary monetary policy involves decreasing the money supply, which leads to higher interest rates and reduced borrowing and spending. This results in a decrease in aggregate demand, causing the aggregate demand curve to shift to the left.

Contractionary Monetary Policy Makes the Aggregate Demand Curve