Practicing Success

Target Exam

CUET

Subject

Economics

Chapter

Macro Economics: Determination of Income and Employment

Question:

When does the "Aggregate demand" rise in the economy?

Options:

When people tend to spend more

When there is an increase in the tax rate

When RBI increases CRR, SLR.

All of the above

Correct Answer:

When people tend to spend more

Explanation:

When there is increase in the spending of people on goods and services, it means there is rise in aggregate demand and vice versa. Increase in tax rate, CRR, SLR, will cause decrease of money supply in the economy, resulting in less money with the people and hence less spending.