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

Question

Quizplus · Accepted Answer

A reduction in expected future real interest rates would make borrowing cheaper and increase the incentive to spend, thus increasing aggregate private spending. On the other hand, a reduction in government spending and an increase in future taxes would both decrease disposable income and reduce the incentive to spend, thus decreasing aggregate private spending.

Which of the Following Will Not Cause Aggregate Private Spending