Question

What effects would the following have on aggregate demand or aggregate supply?

A. Consumer income increases
B. Group of answer choices
C. Aggregate Demand Increases
D. Aggregate Demand Deceases
E. Aggregate Supply Increases
F. Aggregate Supply Decreases

Answer 1

Consumer income increases would have a positive effect on aggregate demand, while a decrease in consumer income would have a negative effect.

Step-by-step explanation:

Consumer income increases would have a positive effect on aggregate demand. When consumer income increases, it leads to an increase in consumption, which is one of the elements of aggregate demand. This increase in consumption leads to a higher aggregate demand.

On the other hand, a decrease in consumer income would have a negative effect on aggregate demand. When consumer income decreases, it leads to a decrease in consumption, which in turn decreases aggregate demand.

Therefore, the effect of consumer income on aggregate demand is positive when it increases and negative when it decreases.