Which of these would cause an increase in a country's aggregate demand?
A) A rise in the country's stock market increases the value of stock held by people.
B) The country's inflation rate is lower than the inflation rates abroad among its trading partners.
C) The government raises taxes in the country.
D) The nominal interest rate falls as the country's price level falls.

Question

Quizplus · Accepted Answer

A rise in the stock market increases people's wealth, which increases their ability and willingness to spend, leading to an increase in aggregate demand. The other options either have no effect (B and D) or decrease aggregate demand (C).

Which of These Would Cause an Increase in a Country's