An Increase in Aggregate Demand Is Most Likely to Be

question 116

Multiple Choice

An increase in aggregate demand is most likely to be caused by:

• A) An increase in real interest rates
• B) A decrease in government spending
• C) A decrease in expected returns on investment
• D) A decrease in the tax rates on household income

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Definitions:

Prompt Payment Discount

A reduction in the amount owed by a buyer to a seller, provided the payment is made within a specified timeframe.

Borrowing Rate

The interest rate charged by banks or financial institutions on loans to their customers.

Accruals

The accounting practice of recording revenues and expenses when they are incurred, regardless of when cash transactions occur.

Vendor Invoices

Documents issued by a supplier to the purchaser detailing the sale transaction and requesting payment.