Which of the following events would shift the aggregate demand curve to the left?

• A. A decrease in consumer confidence leading to lower spending
• B. An increase in government spending on infrastructure
• C. A rise in exports due to a weaker domestic currency
• D. A reduction in interest rates by the central bank

Answer: (A)

Verified step by step guidance

1. Understand that the aggregate demand (AD) curve represents the total quantity of goods and services demanded across all levels of an economy at different price levels.
2. Recall that factors which increase overall spending (consumption, investment, government spending, net exports) shift the AD curve to the right, while factors that decrease overall spending shift it to the left.
3. Analyze each event: a decrease in consumer confidence typically reduces consumer spending, which lowers aggregate demand and shifts the AD curve to the left.
4. Recognize that an increase in government spending, a rise in exports, or a reduction in interest rates generally increase aggregate demand, shifting the AD curve to the right.
5. Conclude that the event causing a leftward shift in the AD curve is the decrease in consumer confidence leading to lower spending.