If aggregate demand shifts left, then in the short run

Question

a.

the price level rises and real GDP falls.
b.

the price and real GDP both fall.
c.

the price level and real GDP both rise.
d.

the price level falls and real GDP rises.

Answer 1

If aggregate demand shifts left, it generally indicates a decrease in the total demand for goods and services in the economy. In the short run, this would typically result in:

b. the price and real GDP both fall.

A leftward shift in aggregate demand leads to a decrease in the price level due to lower demand for goods and services, and it also leads to a decrease in real GDP as economic output contracts in response to this lower demand.