The four components of aggregate expenditure (AE) are:
A) consumption, investment, exports, and imports.
B) consumption, investment, government, and capital.
C) consumption, investment, government, and net exports.
D) consumption, internet, government, and capital.

Question

Quizplus · Accepted Answer

The four components of aggregate expenditure are consumption, investment, government, and net exports. Consumption is the spending by households on goods and services, investment is the spending by firms on capital goods such as machinery and buildings, government spending includes all government purchases of goods and services, and net exports are the difference between exports and imports. Choice A is incorrect because it does not include government spending, which is a significant component of aggregate expenditure. Choice B is incorrect because it includes "capital" which is not a separate component but is already included in investment spending. Choice D is incorrect because "internet" is not a component of aggregate expenditure.

The Four Components of Aggregate Expenditure (AE) Are