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What aspect of Aggregate Demand results in monetary gain from "factors of production" to households?

a) Investment

b) Tariffs

c) Interest

d) Consumption

User Glenebob
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1 Answer

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Final answer:

The aspect of Aggregate Demand that results in monetary gain for households is consumption, as it represents spending by households. Monetary policy, like altering interest rates, can influence consumption levels. The answer is option C.

Step-by-step explanation:

The aspect of Aggregate Demand (AD) that results in monetary gain from "factors of production" to households is consumption. Consumption is the spending by households on goods and services. It is one of the main components of aggregate demand, which also includes investment spending (I), government spending (G), and net exports which is exports (X) minus imports (M). Higher aggregate demand can lead to increased production and, therefore, higher income for households when they provide labor and other resources to businesses.

When the Federal Reserve implements monetary policy to affect interest rates, it indirectly impacts consumption. Lower interest rates tend to stimulate borrowing and spending, especially on big-ticket items like houses and cars, thus increasing consumption. Higher interest rates have the opposite effect, potentially reducing consumption and investment spending.

User Eliel
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