You read a study that predicts that rising oil prices projected for this summer are certain to fuel inflation.Having taken an economics class,due to this expected change in prices,you predict that spending today will ________ and aggregate demand today will ________.
A) be unaffected; be unaffected
B) increase; increase
C) decrease; decrease
D) decrease; increase
E) increase; decrease

Question

Quizplus · Accepted Answer

If people expect prices to rise in the future, they are likely to increase their spending today to avoid higher costs later, which in turn increases aggregate demand today.

You Read a Study That Predicts That Rising Oil Prices