Which of the following would result in a decrease in aggregate demand?
A)A higher domestic price level
B)Higher raw materials prices
C)Lower aggregate expenditures
D)Technological advances
E)Expansionary government policy

Question

Quizplus · Accepted Answer

Lower aggregate expenditures means that consumers and businesses are spending less, which results in a decrease in aggregate demand.

Answer: A and B are incorrect because they would result in an increase in aggregate demand. A higher domestic price level means that consumers and businesses have more income and wealth, leading to an increase in spending. Higher raw materials prices increase production costs, which can lead to higher prices, but also typically lead to increased demand for products and services as companies try to maintain profits.

Answer: D and E are incorrect because they would result in an increase in aggregate demand. Technological advances can increase productivity and reduce costs, leading to greater production and increased spending. Expansionary government policy involves increasing government spending, which can boost aggregate demand.

Which of the Following Would Result in a Decrease in Aggregate