Aggregate demand can be increased by which of the following methods?

Neither 1 nor 2

The correct answer is Option 4: Neither 1 nor 2

Aggregate demand can be increased by increasing the money supply in the economy, as people will have more money to purchase this will result in increased aggregate demand.

To understand how aggregate demand can be increased, let's analyze the given options:

1. Increasing SLR (Statutory Liquidity Ratio): Increasing the SLR means that banks are required to hold a larger portion of their deposits in liquid assets. This reduces the amount of funds available for lending and investment, which typically decreases aggregate demand, not increases it.

2. Selling government securities: Selling government securities is a method of open market operations used by central banks to absorb excess liquidity from the banking system. This also reduces the money supply and typically leads to higher interest rates, which decreases aggregate demand.