Suppose the economy was initially in equilibrium, and the aggregate demand curve shifted to the left.Which of the following would likely occur in this model?
A) Employment would likely fall.
B) The price level would likely rise.
C) The aggregate supply curve would likely shift rightward.
D) The aggregate supply curve would likely shift leftward.

Question

Suppose the economy was initially in equilibrium, and the aggregate demand curve shifted to the left.Which of the following would likely occur in this model?  
A) Employment would likely fall. 
B) The price level would likely rise. 
C) The aggregate supply curve would likely shift rightward. 
D) The aggregate supply curve would likely shift leftward.

Quizplus · Accepted Answer

When the aggregate demand curve shifts to the left, it means that there is decreased demand for goods and services in the economy. As a result, firms will decrease production and may lay off workers, leading to a fall in employment. The price level would also likely fall, not rise, as firms try to reduce their excess supply of goods and services. The aggregate supply curve would not be affected by a shift in aggregate demand.

Suppose the Economy Was Initially in Equilibrium, and the Aggregate