After a major flood destroyed a large residential area in Winnipeg, what might have happened?
A) Aggregate demand shifted to the right and prices increased.
B) Aggregate demand shifted to the left and prices increased.
C) Aggregate demand shifted to the right and prices decreased.
D) Aggregate demand shifted to the left and prices decreased.

Question

Quizplus · Accepted Answer

After a major flood, there would be a need to rebuild and replace what was destroyed, leading to increased spending. This increase in spending shifts the aggregate demand curve to the right, and as demand increases, prices are likely to increase as well due to higher demand for goods and services.

After a Major Flood Destroyed a Large Residential Area in Winnipeg