If the Bank of Canada were to reduce the money supply, other things being equal, we would expect the aggregate expenditure curve to shift

Question

Quizplus · Accepted Answer

Reducing the money supply will lead to an increase in interest rates, which will reduce investment and consumption spending. This will cause a decrease in aggregate expenditures and a shift to the left of the aggregate demand curve. Therefore, the correct answer is D.

If the Bank of Canada Were to Reduce the Money