Final answer:
Government purchases and stock prices influence the direction in which aggregate demand shifts. A decrease in government spending and a fall in stock prices both result in a leftward shift of the AD curve. The correct answer is a.government purchases decrease and shifts left is stock prices fall.
Step-by-step explanation:
When considering the factors that cause aggregate demand (AD) to shift, governmental fiscal policy plays a significant role. Specifically, changes in government purchases have a direct impact on AD. According to the principles of macroeconomics, when government purchases decrease, this will lead to a leftward shift in aggregate demand. Additionally, another factor affecting AD is stock prices. A fall in stock prices generally reduces consumers' wealth, which can decrease consumer spending and lead to a leftward shift in the AD curve. Therefore, if government purchases decrease and stock prices fall, aggregate demand shifts left.