Which of the following would be most likely to cause an increase in current aggregate demand in the United States?
A) increased fear that the U.S. economy was going into a recession
B) an increase in the real interest rate
C) a reduction in the expected rate of inflation
D) rapid growth of real income in Canada and Western Europe

Question

Quizplus · Accepted Answer

Rapid growth of real income in Canada and Western Europe would increase demand for U.S. products, leading to an increase in U.S. exports and therefore an increase in aggregate demand. A) Fear of a recession would decrease aggregate demand. B) An increase in the real interest rate would decrease aggregate demand. C) A reduction in the expected rate of inflation would have no direct effect on aggregate demand.

Which of the Following Would Be Most Likely to Cause