Consumption spending is $22 million,planned investment spending is $7 million,actual investment spending is $7 million,government purchases are $9 million,and net export spending is $3 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.

Question

Quizplus · Accepted Answer

Aggregate expenditure is calculated as the sum of consumption spending, planned investment spending, government purchases, and net export spending. Therefore, aggregate expenditure is 22 million + 7 million + 9 million + 3 million = 41 million. Since there is no information given about any unplanned change in inventories, we cannot conclude A. The GDP is not provided in the question, so we cannot compare the aggregate expenditure to the GDP to answer C and D. However, we know that aggregate expenditure is equal to GDP in a closed economy (i.e., no net exports), assuming no unplanned changes in inventories. Therefore, B is the correct answer.

Consumption Spending Is $22 Million,planned Investment Spending Is $7 Million,actual