Question

An increase in household borrowing for consumption will:____. multiple choice

a. decrease aggregate demand.
b. increase aggregate demand.
c. decrease aggregate supply.
d. increase aggregate supply.

Answer 1

An increase in household borrowing for consumption will increase aggregate demand.

Step-by-step explanation:

An increase in household borrowing for consumption will increase aggregate demand. When households borrow more money to spend on consumption, it stimulates economic activity by increasing consumer spending. This leads to a higher demand for goods and services, which in turn, increases aggregate demand.