The four components of aggregate expenditure are:

a. spending on domestic goods, domestic services, foreign goods, and foreign services.

b. spending on durable goods, inventory investment, government debt, and net exports.

c. consumption, investment, government transfers, and net interest. d. consumption, investment, government purchases, and net exports

Question

Business

Angelina Thompson

31 December, 04:38

The four components of aggregate expenditure are:

a. spending on domestic goods, domestic services, foreign goods, and foreign services.

b. spending on durable goods, inventory investment, government debt, and net exports.

c. consumption, investment, government transfers, and net interest. d. consumption, investment, government purchases, and net exports

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Answers (1)

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Aldo Mcclure · Answer 1

D. Consumption, investment, government purchases and net export

Explanation:

Aggregate expenditure is the sum of all the expenditures undertaken in the economy by the factors during a specific period of time.

Aggregate expenditure (AE) is total of consumption (C), investment (I), government expenditure (G) and net export (NX) that is export (X) minus import (M).

That is,

AE = C + I + G + NX.

Consumption: It refers to the total amount of money spent on goods and services by households.

Investment: This is the amount spent on capital expenditures by individuals and firms.

Government expenditure: Total amount of money spent by the government of a country.

Net export: This is the difference between export and import of a particular country.