Explanation Aggregate expenditure is the summation of all the individual expenditures in the economy from all the economic agents. There are mainly four agents, which include the households, businesses, government, and the net exports. The household expenditures are made for the consumption denoted by C, the business expenditures are made for investment denoted by I, government expenditures by G, and the net exports by (X-M). The summation of all these expenditures in the economy is known as the aggregate expenditure of the economy. Option (a): The aggregate expenditure is the summation of all the expenditures made by the economic agents in the economy. The major economic agents are consumers (C), investors (I), government (G), and the net exports (X-M). Thus, the summation of all these expenditures gives the aggregate expenditure of the economy as C + I + G + ( X − M ) . Thus, it means that option 'a' is the correct answer. Option (b): The transfer payments and other social support expenditures of the government are not included in the calculation of the aggregate expenditure of the economy

The components of aggregate expenditure.

MACROECONOMICS FOR TODAY

10th Edition

ISBN: 9781337613057

Author: Tucker

Publisher: CENGAGE L

See similar textbooks

Question

Chapter 9, Problem 3SQ

To determine

The components of aggregate expenditure.

Expert Solution & Answer

Similar questions

Country A has export sales of 20 billion, government purchases of 1,000 billion, business investment is 50 billion, imports are 40 billion, and consumption spending is 2,000 billion. What is the dollar value of GDP?

Recommended textbooks for you

Economics For Today
Economics
ISBN:9781337613040
Author:Tucker
Publisher:Cengage Learning
MACROECONOMICS FOR TODAY
Economics
ISBN:9781337613057
Author:Tucker
Publisher:CENGAGE L
Essentials of Economics (MindTap Course List)
Economics
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Brief Principles of Macroeconomics (MindTap Cours...
Economics
ISBN:9781337091985
Author:N. Gregory Mankiw
Publisher:Cengage Learning
MACROECONOMICS
Economics
ISBN:9781337794985
Author:Baumol
Publisher:CENGAGE L
Survey Of Economics
Economics
ISBN:9781337111522
Author:Tucker, Irvin B.
Publisher:Cengage,