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A decrease in aggregate demand may be caused by:

A. An expansion in exports to foreign countries.
B. Lower personal taxes.
C. An expansion in government expenditures.
D. A decrease in business optimism about the future.

1 Answer

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Final answer:

A decrease in aggregate demand may be caused by d. a decrease in business optimism about the future.

Step-by-step explanation:

A decrease in aggregate demand may be caused by a decrease in business optimism about the future. When businesses are less optimistic about the future, they may reduce their investment and production, leading to a decrease in aggregate demand. This can have a negative impact on the overall economy.

For example, if businesses believe that there will be a decrease in consumer demand for their products in the future, they may reduce their investment in new production facilities and equipment, leading to a decrease in aggregate demand. Additionally, businesses may decrease their hiring and lay off workers, further reducing consumer spending and aggregate demand.

Therefore, a decrease in business optimism about the future can be a significant factor in causing a decrease in aggregate demand.

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