Final answer:
The statement is true; a decrease in the money supply by the Federal Reserve or an increase in the price level will both lead to a leftward shift in the AD curve, decreasing income and price levels.
Step-by-step explanation:
The statement that either a decrease in the nominal money supply by the Federal Reserve, all else held constant, or an increase in the price level, all else held constant, will shift the aggregate demand (AD) curve to the left is True.
A decrease in the money supply will make banks have less money to lend, leading to higher interest rates, which dampens consumption and investment; key components of aggregate demand. Additionally, an increase in the price level can reduce the purchasing power of consumers, decreasing consumption.
If the AD curve shifts to the left, then the equilibrium quantity of output and the price level will generally fall. The extent of these changes depends on whether the AD shift occurs along the relatively flat or steep portion of the AS curve.
Expansionary monetary policy, conversely, involves increasing the money supply, which would shift the AD curve to the right, increasing both income and price levels, as well as stimulating investment and net exports.