Which of the following will not cause aggregate private spending to increase?
A)an increase in expected future real interest rates
B)an increase in government spending
C)a reduction in future taxes
D)all of the above
E) none of the above

Question

Quizplus · Accepted Answer

An increase in expected future real interest rates will make borrowing and spending more expensive, thus reducing aggregate private spending. On the other hand, an increase in government spending (B) and a reduction in future taxes (C) will both provide more disposable income to households and increase aggregate private spending. Therefore, only option A will not cause aggregate private spending to increase.

Which of the Following Will Not Cause Aggregate Private Spending