Refer to the following figure to answer the questions that follow.

-Based on the figure,which of the following would cause the aggregate demand curve to shift from AD₂ to AD₁?
A) The economy has been producing more than its full employment output level and wages and input prices begin to rise.
B) There is an increase in the price of oil.
C) There is an increase in the general price level that reduces real wealth.
D) There is a reduction in consumer confidence about future growth in the economy.
E) There is a reduction in income tax rates.

Question

Refer to the following figure to answer the questions that follow.
 
-Based on the figure,which of the following would cause the aggregate demand curve to shift from AD₂ to AD₁?
A) The economy has been producing more than its full employment output level and wages and input prices begin to rise. 
B) There is an increase in the price of oil. 
C) There is an increase in the general price level that reduces real wealth. 
D) There is a reduction in consumer confidence about future growth in the economy. 
E) There is a reduction in income tax rates.

Quizplus · Accepted Answer

A reduction in consumer confidence about future growth in the economy would cause a decrease in consumption, investment, and net exports, which would shift the aggregate demand curve to the left from AD₂ to AD₁.

Refer to the Following Figure to Answer the Questions That