Everything else remaining the same, which one of the following increases aggregate demand?
A)a decrease in government spending
B)an increase in taxes
C)a decrease in the price level
D)a decrease in the quantity of money
E)an increase in transfer payments

Question

Quizplus · Accepted Answer

An increase in transfer payments means that households have more disposable income to spend, leading to an increase in consumption spending and ultimately increasing aggregate demand. The other options would decrease aggregate demand: A) decrease in government spending means less spending in the economy, B) increase in taxes decreases disposable income and decreases consumption spending, C) decrease in price level would decrease the amount of goods and services produced, and D) decrease in quantity of money would decrease overall spending in the economy.

Everything Else Remaining the Same, Which One of the Following