Question
Government corrects an inflationary gap by reducing government spending to decrease aggregate demand. What effect does this have on the aggregate demand curve?
Multiple choice question.
There is not enough information to determine.
It shifts left.
It has no effect.
It shifts right.
Multiple choice question.
There is not enough information to determine.
It shifts left.
It has no effect.
It shifts right.
Answers
GPT-4o mini
The correct answer is:
**It shifts left.**
When the government reduces its spending, it decreases aggregate demand, which causes the aggregate demand curve to shift left.
**It shifts left.**
When the government reduces its spending, it decreases aggregate demand, which causes the aggregate demand curve to shift left.