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Question 1: Which of the following will increase the aggregate demand?
I). Higher prices in stock market.
II). Higher prices in real estate market.
III). Higher real wealth.
A. III only.
B. I, II, III.
C. None of them. They will increase the quantity of aggregate demand but not the aggregate demand
itself.
Correct Answer: B
Explanation: Increase in stock and housing prices increases real wealth of households, and thus
increases the aggregate demand.
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