ECONOMICS
AGGREGATE DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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(C), (I), (G) and (X-M)
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(I), (G) and (X-M)
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(C), (I), (G) and (X)
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(C), (I), (G) and (M)
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Detailed explanation-1: -The five components of aggregate demand are consumer spending, business spending, government spending, and exports minus imports. The aggregate demand formula is AD = C + I + G + (X-M).
Detailed explanation-2: -Aggregate demand is the sum of four components: consumption, investment, government spending, and net exports. Consumption can change for a number of reasons, including movements in income, taxes, expectations about future income, and changes in wealth levels.
Detailed explanation-3: -This is often written as C + I + G + (X-M), where C is personal consumption expenditures, I is investment, G is government purchases of goods and services, X is exports, and M is imports. Together, this is all of Gross Domestic Product, or GDP.
Detailed explanation-4: -There are four main aggregate expenditures that go into calculating GDP: consumption by households, investment by businesses, government spending on goods and services, and net exports, which are equal to exports minus imports of goods and services.