A decrease in consumption caused by a factor other than a change in the price level
A) shifts the AD curve to the right.
B) shifts the AD curve to the left.
C) causes an upward movement along the existing AD curve.
D) causes a downward movement along the existing AD curve.
E) none of the above.

Question

Quizplus · Accepted Answer

Any factor that results in a decrease in consumption - for instance, a decrease in consumer confidence or a decrease in consumer wealth - will shift the AD curve to the left, as there will be less aggregate demand for goods and services at all price levels. This is because there will be a decrease in consumption and therefore a decrease in the quantity of goods and services demanded at any given price level.

A Decrease in Consumption Caused by a Factor Other Than