Changes in aggregate demand can be caused by changes in
I. wages.
II. raw materials costs.
III. government spending.
IV. government regulations that increase the cost of doing business.
A) I, II, III, and IV
B) I and III only
C) I, III, and IV
D) III only

Question

Changes in aggregate demand can be caused by changes in 
I. wages.
II. raw materials costs.
III. government spending.
IV. government regulations that increase the cost of doing business.
A) I, II, III, and IV
B) I and III only
C) I, III, and IV
D) III only

Quizplus · Accepted Answer

Government spending directly affects aggregate demand as it is a component of it. Changes in wages, raw materials costs, and regulations primarily affect aggregate supply rather than aggregate demand.

Changes in Aggregate Demand Can Be Caused by Changes in