Which of the following would cause a leftward shift of the aggregate demand curve?
A) an increase in planned investment
B) a drop in the price level
C) a rise in the price level
D) anything that causes an upward shift in the saving function

Question

Which of the following would cause a leftward shift of the aggregate demand curve?  
A) an increase in planned investment 
B) a drop in the price level 
C) a rise in the price level 
D) anything that causes an upward shift in the saving function

Quizplus · Accepted Answer

A leftward shift in the aggregate demand curve can be caused by a decrease in consumption or investment. An upward shift in the saving function implies that at any given income level, people are saving more and consuming less. This reduction in consumption would lead to a decrease in aggregate demand, hence a leftward shift of the aggregate demand curve. Choices A and B would typically cause a rightward shift, and C does not directly cause the aggregate demand curve to shift (it affects aggregate supply conditions).

Which of the Following Would Cause a Leftward Shift of the Aggregate