ECONOMICS
AGGREGATE DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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lower consumption and increases aggregate demand
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lower consumption and lowers aggregate demand
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increase consumption and increases aggregate demand
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increase consumption and lowers aggregate demand
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Detailed explanation-1: -Answer and Explanation: The correct answer is A. A decrease in price level. Aggregate demand shifts favorably when the money supply increases and enable more consumer purchasing power.
Detailed explanation-2: -Relationship between savings and consumption Generally, as consumers save more, they spend less, and vice versa. The (household) savings ratio gives an idea of the average extent of saving for all households in the economy. It is calculated as the percentage of disposable income that is saved.
Detailed explanation-3: -Aggregate demand is the sum of four components: consumption, investment, government spending, and net exports. Consumption can change for a number of reasons, including movements in income, taxes, expectations about future income, and changes in wealth levels. More items