Which combination of macroeconomic changes is most likely to cause a significant increase in the domestic business investment (III) component of aggregate demand?
A depreciation of the exchange rate, an increase in business confidence, and a reduction in spare capacity.
A rise in the central bank's policy interest rate, an increase in corporation tax, and a rise in the household savings ratio.
An appreciation of the exchange rate, a rise in spare capacity, and a reduction in the rate of growth of national income.
A decrease in business confidence, a rise in real interest rates, and a fall in consumer demand.
222 exam-style questions on AQA A Level Economics 2.2 How the macroeconomy works: the circular flow of income, aggregate demand/aggregate supply analysis and related concepts, covering 2.2.1 The circular flow of income, 2.2.2 Aggregate demand and aggregate supply analysis, 2.2.3 The determinants of aggregate demand, 2.2.4 Aggregate demand and the level of economic activity, 2.2.5 Determinants of short-run aggregate supply, and 2.2.6 Determinants of long-run aggregate supply. Each one has a worked solution and a mark scheme showing where the marks go.