Question : Assertion: An increase in government spending will always lead to an increase in aggregate demand.

Reason: Government spending directly stimulates consumer spending and business investment, leading to an increase in aggregate demand.

Option 1: Both Assertion and Reason are correct, and the Reason is the correct explanation of the Assertion.
 

Option 2: Both Assertion and Reason are correct, but the Reason is NOT the correct explanation of the Assertion.
 

Option 3: Assertion is correct, but the Reason is incorrect.

 

Option 4: Assertion is incorrect, but the reason is correct

Question : Assertion: An increase in government regulations can positively impact aggregate demand.

Reason: Government regulations ensure fair competition and consumer protection, which can increase consumer confidence and lead to higher spending, thereby boosting aggregate

Question : Assertion: An increase in the interest rate can lead to an increase in aggregate demand.

Reason: Higher interest rates incentivize saving, which increases the pool of funds available for borrowing and investment, leading to an increase in aggregate demand.

Question : Assertion: An increase in the price level will always lead to a decrease in aggregate demand.

Reason: Higher prices reduce consumers' purchasing power, leading to a decrease in their spending and a subsequent decrease in aggregate demand.

Question : Assertion: An increase in the exchange rate can lead to an increase in aggregate supply.

Reason: A higher exchange rate makes imports more expensive, thereby encouraging domestic production and increasing aggregate supply.

Question : Assertion: Changes in the aggregate demand curve can cause shifts in the aggregate supply curve.

Reason: Changes in aggregate demand can affect businesses' expectations and decisions regarding production levels and future investments, resulting in shifts in the