Aggregate Demand Will NOT Increase When

question 129

Multiple Choice

Aggregate demand will NOT increase when:

• A) household wealth rises but prices are constant.
• B) government purchases of goods rise.
• C) the quantity of money increases.
• D) interest rates increase.

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Definitions:

Sunk Cost

Expenses that have already been incurred and cannot be recovered or altered, which should not affect future business decisions.

Materials Costs

The expense incurred by acquiring raw materials necessary for producing goods, excluding indirect materials like maintenance supplies.

Processing Costs

Expenses related to the steps involved in transforming raw materials into finished goods.

Relevant

Pertinent or related to the matter at hand, often used in decision-making to describe information that should be considered.