Which of the following factors would increase aggregate demand in the goods and services market?
A) an decrease in stock prices
B) an increase in the real interest rate
C) a decrease in real incomes abroad
D) increased optimism on the part of consumers and businesses

Question

Quizplus · Accepted Answer

Increased optimism on the part of consumers and businesses would lead to an increase in consumption and investment, both of which would increase aggregate demand in the goods and services market. A decrease in stock prices (A) would lead to a decrease in wealth and a decrease in consumption, leading to a decrease in aggregate demand. An increase in the real interest rate (B) would lead to a decrease in investment and a decrease in aggregate demand. A decrease in real incomes abroad (C) would lead to a decrease in exports and a decrease in aggregate demand.

Which of the Following Factors Would Increase Aggregate Demand in the Goods