Final answer:
Cutting government spending leads to a leftward shift in the aggregate demand curve, indicating a decrease in the overall demand for goods and services in the economy.
Step-by-step explanation:
The correct answer to the question of which policy would shift the aggregate demand curve to the left is D) Cutting government spending. When the government reduces its spending, it decreases the overall demand for goods and services in the economy. This contractionary fiscal policy results in a leftward shift of the aggregate demand (AD) curve, leading to lower income and price levels. This concept is outlined in various economic discussions, including those on Government Budgets and Fiscal Policy and The Impacts of Government Borrowing. Conversely, the other options such as increasing government spending, decreasing taxes, and reducing interest rates are typically associated with a rightward shift in the AD curve, which increases aggregate demand in the economy.