Question

The four components of aggregate expenditure are:

Answer 1

Answer:

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.

Answer 2

Answer:

D. Consumption, Investment, Government purchases and net exports

Explanation:

Aggregate expenditures refers to the present monetary value of all finished goods and services in the country at that particular point in time. It is the total sum of all the spending undertaken by economic factors in a country. It is expressed mathematically as

AE = C + I + G + NX

Where

C = Consumption

I = investment

G = government spending

NX = Net export

Consumption refers to the use or acquisition of goods and services by the household in the economy.

Investment refers to the purchase of goods not consumed today but rather are used in creating future wealth.

Government spending refers to the acquisition of goods and services by the government.

Net export refers to the difference between a country's total import and total export.