In the full aggregate expenditure model with net exports included:
A) C + G + X = S + T + M.
B) C + G + M = S + T + X.
C) I + G + M = S + T + X.
D) I + G + X = S + T + M.

Question

Quizplus · Accepted Answer

In the aggregate expenditure model, the equilibrium condition is that total spending (C + I + G + X) equals total output or income (S + T + M), where C is consumption, I is investment, G is government spending, X is net exports, S is savings, T is taxes, and M is imports.

In the Full Aggregate Expenditure Model with Net Exports Included