Aggregate demand in an economy with no government or foreign trade is
A)consumer expenditure plus actual investment.
B)consumer expenditure plus planned investment.
C)consumer expenditure plus inventory investment.
D)consumer expenditure plus fixed investment.

Question

Quizplus · Accepted Answer

In an economy with no government or foreign trade, aggregate demand is composed of consumer expenditure (which includes consumption of goods and services) and planned investment (which refers to investments made by firms with the intent to produce goods and services for future consumption). Actual investment and inventory investment are not part of aggregate demand in this scenario. Fixed investment is a type of planned investment but it is not the only type, so option D is not the best choice.

Aggregate Demand in an Economy with No Government or Foreign