Which combination of factors would most likely increase aggregate demand?
A) an increase in household indebtedness and a decrease in net exports
B) an increase in consumer wealth and a decrease in interest rates
C) an increase in personal taxes and a decrease in government spending
D) an increase in business taxes and a decrease in proﬁt expectations

Question

Quizplus · Accepted Answer

An increase in consumer wealth would increase their ability to consume goods and services, thus increasing aggregate demand. A decrease in interest rates would encourage borrowing and spending, also increasing aggregate demand. The other options would have the opposite effect, resulting in a decrease in aggregate demand.

Which Combination of Factors Would Most Likely Increase Aggregate Demand