Refer to the information provided in Figure 29.2 below to answer the question(s) that follow. Figure 29.2
-Refer to Figure 29.2. If economic policy causes output to decrease to Y₀ and the price level to decrease to P_0,the aggregate demand curve shifts from

Question

Refer to the information provided in Figure 29.2 below to answer the question(s) that follow.

Figure 29.2
-Refer to Figure 29.2. If economic policy causes output to decrease to Y₀ and the price level to decrease to P_0,the aggregate demand curve shifts from

Quizplus · Accepted Answer

When output decreases to YS1U1B10S1U1B0 and the price level decreases to PS1U1B10, the new equilibrium point is to the left of the original equilibrium point. This means that aggregate demand has decreased, causing the aggregate demand curve to shift to the left. Therefore, the correct answer is B, as the new aggregate demand curve will be ADS1U1B12S1U1B0 to ADS1U1B11.S1U1B0.

Refer to the Information Provided in Figure 29