Which of the following will increase the aggregate demand curve? An increase in consumer spending. All...

Which of the following will increase the aggregate demand curve?

An increase in consumer spending.

All of these items will increase aggregate demand.

The buying of government securities by the Federal Reserve Bank.

An increase in government purchases.

increase in corporate investment spending

Expert Solution

The right answer is, all of these items will increase aggregate demand. When the consumer spending increases it means people are demanding more goods and services which will shift the aggregate demand curve to the right. Secondly, when the federal reserve bank purchases the government securities it will increase the money supply that will lower the interest rate that will further enhance the income level in the economy, therefore, the demand will increase. Thirdly, when government purchase increases it means the government is spending more money on the goods and services in the economy that will further increase the demand and shift the aggregate demand curve to the right. Lastly, increasing corporate investment spending will increase the income and profit level in the economy and a part of that increment in profit and income will be spend on goods and services that will increase the demand level in the economy and shift the aggregate demand curve to the right.

Rahul Sunny answered 8 months ago

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