For a given inflation rate if a resolution of international disputes leads to a cutback in government military spending, then the ______ shifts _____.
A) aggregate demand curve; right
B) aggregate demand curve; left
C) aggregate supply curve; upward
D) aggregate supply curve; downward

Question

Quizplus · Accepted Answer

A cutback in government military spending results in a decrease in government expenditure, which causes a decrease in aggregate demand. Therefore, the aggregate demand curve shifts to the left. The inflation rate is unaffected by this shift.

For a Given Inflation Rate If a Resolution of International