Try again
Correct
Try again
Try again
Solution:
A decrease in government spending would cause the aggregate demand curve to shift to the left. Therefore, the correct answer is (b) the aggregate demand curve to shift to the left.
Government spending is one of the components of aggregate demand, which is the total demand for goods and services in an economy.
A decrease in government spending means that the government is spending less on goods and services, which reduces the total demand in the economy.
This results in a leftward shift of the aggregate demand curve.
Correct option is (b)