Question

All of the following would increase aggregate demand EXCEPT: Group of answer choices an increase in consumer confidence a decrease in excess capacity an increase in foreign national income an increase in government spending a decrease in income taxes

Answer 1

Answer: decrease in excess capacity

Step-by-step explanation:

Aggregate demand is the total amount of goods and services that consumers purchase at certain prices at the market. Increase my n aggregate demand can be as a result of a rise in government spending and reduction on n tax rate. This is an expansionary policy and will in turn lead to a rise in the demand of goods and services.

Also, increase in consumer confidence will lead to more good being bought likewise an increase in foreign national income. Therefore, decrease in excess capacity is the correct answer as it is a situation whereby supply is less than the demand for a product.