Which of the following increases aggregate demand?
A) an increase in the exchange rate
B) an increase in the quantity of money
C) an increase in taxes
D) a decrease in government expenditures

Question

Quizplus · Accepted Answer

An increase in the quantity of money would increase aggregate demand by increasing consumers' purchasing power and businesses' ability to invest. A decrease in government expenditures would decrease aggregate demand as it reduces the amount of money being spent in the economy. An increase in taxes would also decrease aggregate demand as it reduces consumers' disposable income. An increase in the exchange rate would make exports more expensive and imports cheaper, leading to a decrease in net exports and a decrease in aggregate demand.

Which of the Following Increases Aggregate Demand