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 will actually stimulate private spending as the cost of borrowing decreases, making investment and consumption more attractive. On the other hand, a reduction in government spending and an increase in future taxes will dampen consumer and business confidence and ultimately decrease aggregate private spending.

Which of the Following Will NOT Cause Aggregate Private Spending