Question

Which of the following will cause the aggregate demand curve to shift to the left? A....

Which of the following will cause the aggregate demand curve to shift to the left?

A.

  A decrease in consumer and business confidence because of a terrorist attack.
B.

A decrease in the interest rate.
C.

A decrease in business taxes.
D.

An improvement in technology.
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Answer #1

A decrease in consumer and business confidence because of a terrorist attack

Aggregate demand refers to the total value of final goods and services which all the sectors of an economy are planning to buy at a given level of income during a period of accounting year. A decrease in consumer and business confidence because of a terrorist attack will decrease the spending of households and businesses on purchase of goods and services and hence aggregate demand will decrease and shift to the left.

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