Final answer:
A decrease in tax rates on household income is most likely to cause an increase in aggregate demand, as it increases disposable income and consumption.
Therefore the correct answer is option b. an increase in real interest rates.
Step-by-step explanation:
An increase in aggregate demand is most likely to be caused by a decrease in tax rates on household income. Government spending and tax rate changes are essential tools used to affect aggregate demand. For instance, higher government spending usually shifts the aggregate demand curve to the right, resulting in higher income and price levels.
Similarly, a decrease in tax rates gives households more disposable income, which can increase consumption and shift the aggregate demand curve to the right. Conversely, higher real interest rates would decrease borrowing, reduce investment and consumption, and lead to a leftward shift in the aggregate demand. Likewise, a decrease in expected returns on investment would also discourage investment and shift aggregate demand leftward.