An increase in household borrowing for consumption will:
A)decrease aggregate demand.
B)increase aggregate supply.
C)increase aggregate demand.
D)decrease aggregate supply.

Question

Quizplus · Accepted Answer

An increase in household borrowing for consumption will increase their disposable income and thus increase their purchasing power. This will lead to a rise in consumer spending, which in turn will increase aggregate demand.

An Increase in Household Borrowing for Consumption Will