Aggregate demand increases when
A) foreign incomes fall.
B) interest rates rise.
C) the exchange rate rises.
D) None of the above answers is correct.

Question

Quizplus · Accepted Answer

None of the options A, B, or C directly cause an increase in aggregate demand. A) A fall in foreign incomes would likely decrease demand for a country's exports, reducing aggregate demand. B) Higher interest rates typically reduce consumption and investment, lowering aggregate demand. C) A rising exchange rate makes a country's goods more expensive abroad, potentially reducing exports and thus aggregate demand.

Aggregate Demand Increases When