How Does a Reduction in Money Supply Affect the Aggregate

question 120

Multiple Choice

How does a reduction in money supply affect the aggregate demand curve?  

• A) The curve shifts leftward, lowering real GDP and the price level. 
• B) The curve shifts leftward, raising real GDP and the price level. 
• C) The curve shifts rightward, lowering real GDP but raising the price level. 
• D) The curve shifts rightward, raising real GDP and the price level.

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Definitions:

North Pacific

A region of the Pacific Ocean extending from the Equator to the Arctic Ocean, bounded by Asia and the Americas.

Drought

An extended period of below-average precipitation.

High-Pressure Weather

refers to weather conditions associated with areas of high atmospheric pressure, often resulting in clear skies and dry weather.

Ocean Currents

Large-scale movements of seawater, primarily driven by wind patterns, temperature differences, and the Earth's rotation, which circulate water across the globe.