Question

Which of these will NOT cause an increase in aggregate demand?

A) decrease in the price level

B) increase in government spending

C) decrease in the real interest rate

D) decrease in the personal income tax rate

Answer 1

A) decrease in the price level .

Step-by-step explanation:

A decrease in the price level will not cause an increase in aggregate demand.

Answer 2

A) decrease in the price level

Step-by-step explanation:

Aggregate demand is based on four components which are: consumption, investment, government spending and net exports.if there is a fall in interest rates, then production will increase since factors like technology improves and output increases, whereas, decrease in the price level will not cause an increase in aggregate demand which will cause the aggregate demand curve to shift left.