Which of the following will NOT cause aggregate private spending to increase?
A)an increase in expected future real interest rates
B)an increase in government spending
C)a reduction in future taxes
D)all of the above
E)none of the above

Question

Quizplus · Accepted Answer

An increase in expected future real interest rates will likely lead to a decrease in investment spending, which is a component of aggregate private spending. Therefore, it will not cause aggregate private spending to increase. On the other hand, choices B and C may increase aggregate private spending as government spending and tax reduction can increase disposable income and stimulate consumption spending. Therefore, the correct answer is A.

Which of the Following Will NOT Cause Aggregate Private Spending