Answer :
Other things equal, an increase in reserve requirements, decreases aggregate demand. Hence option (b) is the answer.
What do you mean by aggregate demand?
In macroeconomics, the word "aggregate demand" is used to define the entire demand for locally produced commodities, including capital goods, consumer goods, and services. The entire amount of money exchanged for those products and services at a particular price level and point in time is referred to as aggregate demand.
Hence, consisting of consumption, investment, government spending, and net exports, aggregate demand is the total of these four factors. Consumption can alter due to a variety of factors, such as changes in wealth, taxes, income expectations, and income levels, as well as variations in income. It is measured as the overall quantity of demand for all finished products and services produced in an economy, aggregate demand is the total amount of demand.
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