Question

Which visual clue differentiates contraction of demand from decrease in demand?

Options

• Upward movement on the curve vs. no movement

• Movement on a fixed curve vs. shift of the entire curve

• Only downward movement along the curve

• Both involve rightward curve shifts

Answer 1

Movement on a fixed curve vs. shift of the entire curve

Explanation:

Contraction is a movement up or down the same demand curve, while a decrease is shown by a shift of the curve to the left.