Question

The aggregate demand curve shifts when there are changes in:

a. the inflation rate.
b. planned spending that are not caused by changes in output or the inflation rate.
c. planned spending that are caused only by changes in output or the inflation rate.
d. real GDP.

Answer 1

a. the inflation rate.

Step-by-step explanation:

The aggregate demand curve shifts when there are changes in the inflation rate because when inflation rises, purchasing power declines and real spending falls which implies that Aggregate Demand falls.

This change (rise) in the rate of inflation causes the Aggregate Demand curve to shift toward the left.