Which factor would lead to a reduction in aggregate demand?

Multiple choice question for Supply and Demand. Select an option, then review the explanation below.

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A rise in consumer spendingA growth in export incomeAn increase in tax collectionsA boost in capital investmentAn expansion in government expenditure

Explanation

An increase in export revenue typically raises aggregate demand by bringing more income into the economy. Therefore, it would not decrease aggregate demand. Conversely, factors like higher taxes can reduce aggregate demand by lowering disposable income.

Practice related questions from the same subject.

1.What is the typical shape of a demand curve?
2.What term describes a company earning profits beyond its normal profit level?
3.How does an increase in marginal cost affect output, and how does an increase in marginal revenue impact output?
4.Marginal revenue refers to the ________ resulting from producing an additional ________ of output.
5.What are firms generally assumed to do with their costs and profits?

Which factor would lead to a reduction in aggregate demand?

Explanation

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