If banks become less willing to make loans, the aggregage demand curve
A)will shift to the left, and the money demand curve will shift to the right.
B)and the money demand curve will both shift to the left.
C)will shift to the right, and the money demand curve will shift to the left.
D)and the money demand curve will both shift to the right.

Question

Quizplus · Accepted Answer

When banks become less willing to make loans, it becomes harder for businesses and consumers to borrow money. This leads to a decrease in spending, which shifts the aggregate demand curve to the left. Additionally, with fewer loans being made, the demand for money decreases as there's less need for borrowing, shifting the money demand curve to the left as well.

If Banks Become Less Willing to Make Loans, the Aggregage