If the government wished to shift aggregate demand to the left, it might:

Question

Quizplus · Accepted Answer

Decreasing military spending would reduce government spending, which is a component of aggregate demand. Therefore, it would cause a leftward shift in aggregate demand. Increasing educational grants would increase consumer spending on education, which is a component of aggregate demand, leading to a rightward shift. Decreasing corporate income taxes would increase investment and potentially increase consumer spending, leading to a rightward shift. Therefore, only choice A would cause a leftward shift in aggregate demand.

If the Government Wished to Shift Aggregate Demand to the Left