Which of the following would cause a decrease in aggregate demand?
A) a rise in wages
B) an increase in the price level
C) an increase in the money supply
D) a fall in investor confidence

Question

Quizplus · Accepted Answer

A fall in investor confidence would lead to a decrease in investment and ultimately a decrease in aggregate demand. A rise in wages (A) would increase consumer spending power and thus increase aggregate demand. An increase in the price level (B) would reduce the purchasing power of consumers and decrease aggregate demand. An increase in the money supply (C) would increase consumer spending power, leading to an increase in aggregate demand.

Which of the Following Would Cause a Decrease in Aggregate