Changes in aggregate demand can be caused by changes in:
A) wages.
B) business costs.
C) raw materials costs.
D) government spending.

Question

Quizplus · Accepted Answer

Changes in government spending can directly impact aggregate demand. Increases in government spending can lead to an increase in aggregate demand as more money is being injected into the economy. Conversely, decreases in government spending can lead to a decrease in aggregate demand as less money is being injected into the economy. Changes in wages, business costs, and raw materials costs can indirectly impact aggregate demand through their effects on production costs and prices, but the impact may not be as direct or immediate as changes in government spending.

Changes in Aggregate Demand Can Be Caused by Changes In