Answer to Question #16221 in Economics of Enterprise for babu

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

Consumption demand – decrease of price level could lead to increase of aggregate demand
Investment demand – Increase in interest rate will lead to attraction of more sources
Net exports- Increase of Export with decrease of Import will lead to increase of aggregate demand

Consumption demand has an effect upon Aggregate supply side