Question

The four components of planned 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, planned investment, government transfers, and net interest.D. consumption, planned investment, government purchases, and net exports.

Answer 1

Answer:

D.

Explanation:

Aggregate Planned Expenditure (AE) can be defined as the sum value of all the finished products and services in an economy. This value is calculated by adding all the expenditures that are considered in an economy. These components are household consumption (C), planned investments (I), Government expenditures or purchases (G), and net exports (NX) [net exports is the difference between the total exports and total imports].

The sum value or the aggregate planned expenditure is calculated by adding all these components.  

So, the correct answer is option D.