To get a complete measure of the total spending on U.S.-produced final goods and services, one must adjust aggregate demand by
A)adding imports and subtracting exports.
B)adding imports that are purchased by U.S.consumers.
C)adding exports and subtracting imports.
D)subtracting exports sold to foreigners.

Question

Quizplus · Accepted Answer

To get a complete measure of the total spending on U.S.-produced final goods and services, one must adjust aggregate demand by adding exports and subtracting imports. This is because imports represent spending by U.S. consumers and firms on foreign-produced goods and services, which is not included in the measure of domestic production. On the other hand, exports represent domestic production that is sold to foreigners, and thus contribute to the total spending on U.S. goods and services. Therefore, adding exports and subtracting imports is the best choice for adjusting aggregate demand to reflect the total spending on U.S.-produced goods and services.

To Get a Complete Measure of the Total Spending on U.S.-Produced