Which combination of factors would most likely increase aggregate demand? rev: 06_12_2018 Multiple Choice An increase in household indebtedness and a decrease in net exports. An increase in consumer wealth and a decrease in interest rates. An increase in net exports and a decrease in government spending. An increase in business taxes and a decrease in profit expectations.

Question

Nia Bonilla

Business

20 July, 11:43

Which combination of factors would most likely increase aggregate demand? rev: 06_12_2018 Multiple Choice An increase in household indebtedness and a decrease in net exports. An increase in consumer wealth and a decrease in interest rates. An increase in net exports and a decrease in government spending. An increase in business taxes and a decrease in profit expectations.

+1

Answers (1)

Know the Answer?

Billie · Answer 1

An increase in consumer wealth and a decrease in interest rates.

Explanation:

Aggregate demand is defined as measurement of total demand of all finished goods and services in an economy. It is expressed as the total money that is exchanged for goods and services in a particular period at a specified price level.

The factors that affect aggregate demand include interest rate, household wealth, changes in inflation, currency exchange rate.

An increase in consumer wealth will lead to increased aggregate demand, because consumers have surplus cash to spend on goods.

A decrease in interest rate of loans will result in lower cost when obtaining loans. This will result inore people getting loans and an increase in spending, which will in turn increase aggregate demand.