Chapter 20: Problem 6

Which of the following will not shift the aggregate demand curve to the left? a. Consumers become more optimistic about the future. b. Government spending decreases. c. Business optimism decreases. d. Consumers become pessimistic about the future.

Short Answer

Expert verified

Option A (consumers become more optimistic about the future) is the only option that will not cause a leftward shift in the aggregate demand curve, as it leads to an increase in consumer spending and a rightward shift instead.

Step by step solution

Analyze Option A

Option A states that consumers become more optimistic about the future. When consumers are more optimistic, they are more likely to spend money, which increases the demand for goods and services. As a result, aggregate demand increases, causing a rightward shift in the aggregate demand curve, not a leftward shift.

Analyze Option B

Option B states that government spending decreases. A decrease in government spending implies that there is less demand for goods and services in the economy. This reduced demand for goods and services leads to a leftward shift in the aggregate demand curve.

Analyze Option C

Option C states that business optimism decreases. When businesses are pessimistic about the economy, they are less likely to invest in expanding their operations or increasing their production of goods and services. This decrease in business investment reduces the overall demand for goods and services, causing a leftward shift in the aggregate demand curve.

Analyze Option D

Option D states that consumers become pessimistic about the future. When consumers are pessimistic, they are more likely to save money and reduce their consumption of goods and services. This decrease in consumer spending leads to a leftward shift in the aggregate demand curve.

Determine the correct answer

Based on our analysis, Option A (consumers become more optimistic about the future) is the only option that will not cause a leftward shift in the aggregate demand curve. All other options will result in a decrease in overall demand for goods and services, leading to a leftward shift in the aggregate demand curve. Thus, the correct answer is Option A.