Aggregate demand shifts left when the government
A)decreases taxes.
B)cuts military expenditures.
C)creates a new investment tax credit
D)None of the above is correct.

Question

Quizplus · Accepted Answer

When the government cuts military expenditures, it reduces its overall spending in the economy, which leads to a decrease in aggregate demand. Decreasing taxes or creating a new investment tax credit would increase aggregate demand, so options A and C are incorrect. Therefore, the correct answer is B.

Aggregate Demand Shifts Left When the Government