The components of aggregate expenditure are consumption expenditureO a. investment, government expenditure on goods and services, and net income.O b. interest, government expenditure on goods and services, and net exports.O c. investment, government expenditure on goods and services, and net exports.O d. interest, gross spending, and net spending.O e. investment, government expenditure on goods and services, and net taxes.

Answered: The components of aggregate expenditure…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The components of aggregate expenditure are consumption expenditure
O a. investment, government expenditure on goods and services, and net income.
O b. interest, government expenditure on goods and services, and net exports.
O c. investment, government expenditure on goods and services, and net exports.
O d. interest, gross spending, and net spending.
O e. investment, government expenditure on goods and services, and net taxes.

Expert Solution

Step 1

The aggregate expenditure refers to the total expenditure in an economy. When the economy is in equilbrium, the aggregate expenditure is equal to the national income.

The equilbrium occurs when the aggregate expenditure line intersects the 45-degree line. The 45-degree line shows the combinations of points at which the income is equal to the aggregate expenditure.

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