Changes in aggregate demand
A)could be caused by changes in the spending decisions of the households,businesses,the government,and foreigners.
B)are very uncommon.
C)are unlikely to change quickly in response to economic events.
D)are primarily based on changes in firms' abilities to produce products.
E)are not affected by changes in government policies.

Question

Quizplus · Accepted Answer

Changes in aggregate demand can be caused by changes in consumption spending by households, investment spending by businesses, government spending, and net exports. These spending decisions can be influenced by various factors such as changes in income, interest rates, taxes, and international trade. Therefore, option A is the correct choice. Option B is incorrect because changes in aggregate demand are not uncommon, in fact, they are quite frequent. Option C is incorrect because aggregate demand can change quickly in response to economic events such as a recession, inflation, or a natural disaster. Option D is incorrect because changes in firms' abilities to produce products primarily affect aggregate supply, not demand. Option E is incorrect because changes in government policies can have a significant impact on aggregate demand through changes in government spending, taxes, and regulations.

Changes in Aggregate Demand