Question

In which case can we be sure aggregate demand shifts left overall?

a. people want to save more for retirement and the Fed increases the money supply.

b.people want to save more for retirement and the Fed decreases the money supply.

c. people want to save less for retirement and the Fed increases the money supply.

d.people want to save less for retirement and the Fed decreases the money supply.

Answer 1

b. people want to save more for retirement and the Fed decreases the money supply.

Step-by-step explanation:

• There is a shift in the aggregate demand curve towards the left when the people tend to reduce their spending and the consumer may spend less due to the rise in the standards of livings.

• Hence the consumer may decide to spend less and thus there is a decline in the value of the product and an increase in money values for the future.