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Which of the following shifts aggregate demand to the left?

a. increase in the price
b. bank of canada sells bonds in the open
c. increase in net
d. investment tax credit

1 Answer

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Final answer:

The Bank of Canada selling bonds in the open market would shift the aggregate demand curve to the left, as it represents a contractionary monetary policy which can lead to higher interest rates and reduced spending.

Step-by-step explanation:

The question asks which of the following actions would shift aggregate demand to the left. When considering a leftward shift in aggregate demand, we're looking at what would cause the economy to decrease in total demand for goods and services. An increase in the price level generally would not shift the demand curve itself; it moves along the curve. However, if the Bank of Canada sells bonds in the open market, it is conducting a contractionary monetary policy, which reduces the money supply. This can lead to higher interest rates, decreasing investment spending and consumption, making this the right choice for shifting aggregate demand to the left. An increase in net exports or implementing an investment tax credit would both stimulate the economy and shift the aggregate demand curve to the right, not the left.

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