Suppose an economy has no government and no international transactions.What is aggregate expenditure at each level of income equal to?
A) consumption plus saving
B) planned investment plus saving
C) planned investment minus savings
D) consumption plus planned investment

Question

Suppose an economy has no government and no international transactions.What is aggregate expenditure at each level of income equal to?  
A) consumption plus saving 
B) planned investment plus saving 
C) planned investment minus savings 
D) consumption plus planned investment

Quizplus · Accepted Answer

In the absence of government and international transactions, there is no government spending or foreign trade that would affect aggregate expenditure. Therefore, aggregate expenditure at each level of income would be equal to the sum of consumption and planned investment, as these are the only components of aggregate demand in this scenario. Saving is not included as it represents a withdrawal of funds from the circular flow of income and expenditure.

Suppose an Economy Has No Government and No International Transactions