What does the aggregate expenditure line represent?
A) total planned spending at each income level
B) total planned spending at each price level
C) total planned spending at each income level, holding the price level constant
D) total planned spending at each price level, holding the level of income constant

Question

What does the aggregate expenditure line represent?  
A) total planned spending at each income level 
B) total planned spending at each price level 
C) total planned spending at each income level, holding the price level constant 
D) total planned spending at each price level, holding the level of income constant

Quizplus · Accepted Answer

The aggregate expenditure line represents the total planned spending at each income level, holding the price level constant. This is because the aggregate expenditure in an economy is influenced by the level of income and the price level. By holding the price level constant, the aggregate expenditure line shows the relationship between income and total planned spending (consumption, investment, government expenditure, and net exports).

What Does the Aggregate Expenditure Line Represent