A decrease in aggregate demand could be caused by
A)A decrease in the value of the domestic currency.
B)A booming economy.
C)Contractionary monetary policy.

Question

Quizplus · Accepted Answer

Contractionary monetary policy involves reducing the money supply, which increases interest rates and decreases borrowing and spending, leading to a decrease in aggregate demand. A decrease in the value of the domestic currency (choice A) could actually increase aggregate demand by making exports more competitive and increasing foreign investment. A booming economy (choice B) would likely increase aggregate demand, not decrease it.

A Decrease in Aggregate Demand Could Be Caused by