Everything else held constant,aggregate demand increases when
A)taxes are cut.
B)government spending is reduced.
C)animal spirits decrease.
D)the money supply is reduced.

Question

Quizplus · Accepted Answer

When taxes are cut, there is more money available for individuals and businesses to spend or invest, which leads to an increase in aggregate demand.

B) Government spending reduction typically leads to a decrease in aggregate demand. 
C) Animal spirits refer to the level of confidence and optimism among consumers and businesses. A decrease in animal spirits suggests a decrease in consumer and business confidence, which can lead to a decrease in aggregate demand.
D) A reduction in the money supply would typically lead to a decrease in aggregate demand since there is less money available for individuals and businesses to spend or invest.

Everything Else Held Constant,aggregate Demand Increases When