Which of the following government policies would increase aggregate demand?
A) a deficit in the government budget
B) a stimulation of investment through an increase in taxes
C) a stimulation of consumption through an increase in taxes
D) a surplus in the government budget

Question

Which of the following government policies would increase aggregate demand?  
A) a deficit in the government budget 
B) a stimulation of investment through an increase in taxes 
C) a stimulation of consumption through an increase in taxes 
D) a surplus in the government budget

Quizplus · Accepted Answer

A deficit in the government budget means the government is spending more money than it is bringing in through taxes. This increased government spending will increase aggregate demand as the government is putting more money into the economy.

Which of the Following Government Policies Would Increase Aggregate Demand