Which combination of factors would most likely increase aggregate demand? rev: 06_12_2018 Multiple Choice An increase in household indebtedness and a decrease in net exports. An increase in consumer wealth and a decrease in interest rates. An increase in net exports and a decrease in government spending. An increase in business taxes and a decrease in profit expectations.

Respuesta :

Answer:

An increase in consumer wealth and a decrease in interest rates.

Explanation:

Aggregate demand is defined as measurement of total demand of all finished goods and services in an economy. It is expressed as the total money that is exchanged for goods and services in a particular period at a specified price level.

The factors that affect aggregate demand include interest rate, household wealth, changes in inflation, currency exchange rate.

An increase in consumer wealth will lead to increased aggregate demand, because consumers have surplus cash to spend on goods.

A decrease in interest rate of loans will result in lower cost when obtaining loans. This will result inore people getting loans and an increase in spending, which will in turn increase aggregate demand.

The maximum demand for all finished products and services produced in a particular sector is referred to as aggregate demand.

What are the factors of Aggregate Demand?

Aggregate demand is based on four components. Consuming, capital, government expenditures, and capital inflows are examples of these.

Net exports are the number of exports minus the number of imports. If consumption increases i.e. Because people are consuming more, aggregate demand for commodities and services will rise.

Additionally, if investment increases i.e. If financing rates fall, manufacturing will rise as technology advances and output increases. As a result, demand will soar.

Following that, a rise in government spending, such as investment in infrastructure or education, will boost productivity while also increasing the demand for materials.

Finally, if net exports are positive, it means that the country exports more than it imports. As a result, demand for products and services rises, and AD rises as well.

Thus, Option B is the correct combination of factors due to which Aggregate Demand will increase.

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