Which Event Causes a Decrease in Aggregate Demand

question 177

Multiple Choice

Which event causes a decrease in aggregate demand?

• A) increases in consumer confidence
• B) increases in taxes
• C) decreases in interest rates
• D) increases in government spending

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Definitions:

Fixed Expenses

Costs that do not change with the level of production or sales over a short period, such as rent or salaries.

Contribution Margin Ratio

A metric used to assess a product's profitability, calculated by subtracting variable costs from sales revenue and dividing by sales revenue.

Break-even Point

The point at which total costs equal total revenue, meaning that a business is neither making a profit nor incurring a loss.

Net Loss

The amount by which expenses exceed revenues over a specific period, indicating a negative financial performance.