Which of the following increases aggregate demand?
A) a decrease in government expenditure
B) a decrease in tax rates
C) a decrease in the quantity of money
D) a decrease in foreign income

Question

Quizplus · Accepted Answer

A decrease in tax rates increases disposable income, leading to an increase in consumer spending, which in turn increases aggregate demand. Option A would decrease government spending, leading to a decrease in aggregate demand. Option C would decrease the money supply, leading to a decrease in aggregate demand. Option D would decrease exports, leading to a decrease in foreign income and a decrease in aggregate demand.

Which of the Following Increases Aggregate Demand