Question

Which of the following statements is correct?

Options

• Aggregate Demand refers to the total demand for the goods and services in the economy as a whole.

• Aggregate Demand constitutes of Consumption Expenditure, Investment Expenditure and Government Expenditure only.

• The expenditure of household and private investors in an economy for an accounting year is termed as Public Consumption Expenditure.

• The demand of only goods by the households in an economy is termed as Private Investment Expenditure.

Answer 1

Aggregate Demand refers to the total demand for the goods and services in the economy as a whole.

Explanation:

Aggregate demand is made up of the following components:

1. private consumption spending,
2. government consumption expenditure
3. investment expenditure,
4. net exports.