The key idea of the aggregate expenditure model is that in any particular year,the level of GDP is determined mainly by
A)investment spending.
B)export spending.
C)government spending.
D)the level of aggregate expenditure.

Question

Quizplus · Accepted Answer

The aggregate expenditure model suggests that the level of GDP is determined by the level of aggregate expenditure in the economy. Aggregate expenditure is made up of four components: consumption spending, investment spending, government spending, and net exports. While investment spending, export spending, and government spending are all important factors in determining GDP, the aggregate expenditure model emphasizes that the total level of spending (or AD) in the economy is what ultimately drives GDP. Therefore, option D is the best choice.

The Key Idea of the Aggregate Expenditure Model Is That