Which of the following correctly describes the meaning of the aggregate expenditure (AE)function?
A)The AE function relates the level of desired aggregate expenditure to the level of actual national income.
B)The AE function relates the level of desired consumption expenditure to desired aggregate expenditure.
C)The AE function relates the level of desired investment expenditure to desired aggregate expenditure.
D)The AE function relates the level of nominal GDP to the level of real GDP.
E)The AE function relates the level of aggregate demand to the price level.

Question

Quizplus · Accepted Answer

The aggregate expenditure (AE) function is a macroeconomic equation that relates the level of desired aggregate expenditure (planned spending) to the level of actual national income (real output). It is typically represented as AE = C + I + G + NX, where C is consumption expenditure, I is investment expenditure, G is government expenditure, and NX is net exports. The AE function is a key concept in Keynesian economics and helps to explain how changes in spending can impact the overall level of economic activity.

Which of the Following Correctly Describes the Meaning of the Aggregate