In terms of the aggregate demand and supply framework, a decrease in the money supply will shift the aggregate
A) demand curve to the right.
B) demand curve to the left.
C) supply curve to the left.
D) supply curve to the right.

Question

Quizplus · Accepted Answer

A decrease in the money supply will cause interest rates to rise, leading to a decrease in investment and consumption spending. This results in a decrease in aggregate demand, which is represented by a leftward shift of the aggregate demand curve.

In Terms of the Aggregate Demand and Supply Framework, a Decrease