Consumption spending is $5 million, planned investment spending is $8 million, actual investment spending is $8 million, government purchases are $10 million, and net export spending is $2 million. Based on this information, which of the following is true?
A)There was an unplanned change in inventories.
B)Aggregate expenditure is equal to GDP.
C)Aggregate expenditure is greater than GDP.
D)Aggregate expenditure is less than GDP.
E)Unemployment will rise.

Question

Quizplus · Accepted Answer

GDP is equal to aggregate expenditure, which is calculated as the sum of consumption spending, planned investment spending, government purchases, and net export spending. Adding up the numbers given:

Aggregate expenditure = consumption spending + planned investment spending + government purchases + net export spending
= $5 million + $8 million + $10 million + $2 million
= $25 million

Since this is equal to GDP, option B is correct. Options A, C, D, and E are not supported by the given information.

Consumption Spending Is $5 Million, Planned Investment Spending Is $8