Question

If you wanted to increase aggregate demand how would you do it for:
Consumption demand
Investment demand
Net exports
Which one of these types of expenditure also have an effect upon the Aggregate supply side of the economy?

Answer 1

1. Consumption demand
- to increase person's income
- to increase prices
of substitutions
- to decrease prices of compliments etc.
2. Investment
demand
- to decline tax rate
- to impove investment legislation
- to
create good invextment atmosphere
3. Net export
- to increase quality of
national products
- to conduct stimulating export-import policy
- to
provide tax benefits for export-oriented companies\

All of these types can
lead to AS changes but investment and consumption demand have the greatest
impact.