Given an upward sloping aggregate supply curve, which of the following changes in the aggregate demand curve is observed when the Fed reduces the money supply?

a. The aggregate demand curve shifts leftward, lowering real GDP and the price level
b. The aggregate demand curve shifts leftward, raising real GDP and the price level.
c. The aggregate demand curve shifts leftward, lowering real GDP but raising the price level.
d. The aggregate demand curve shifts rightward, raising real GDP and the price level.
e. The aggregate demand curve shifts rightward, lowering real GDP but raising the price level.

Answer: a. The aggregate demand curve shifts leftward, lowering real GDP and the price level

Economics

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