Which of the following will increase aggregate expenditure in the United States?
A)an increase in the value of the dollar
B)an increase in the price level
C)an increase in interest rates
D)an increase in government purchases

Question

Quizplus · Accepted Answer

An increase in government purchases will lead to an increase in aggregate expenditure, as government purchases are a component of aggregate expenditure. Increase in the value of the dollar (A) will lead to a decrease in net exports and thus, aggregate expenditure. Increase in the price level (B) will lead to a decrease in aggregate expenditure, as people will buy fewer goods and services due to increased prices. Increase in interest rates (C) will lead to a decrease in investment and consumption expenditure, thus decreasing aggregate expenditure.

Which of the Following Will Increase Aggregate Expenditure in the United