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

Question

Quizplus · Accepted Answer

The aggregate expenditure model asserts that the level of GDP is determined primarily by the level of aggregate expenditure, which is the sum of consumption expenditure, investment expenditure, government expenditure, and net export expenditure. Therefore, GDP is the most appropriate choice for the missing term. The other options (frictional unemployment, export spending, and government spending) may influence GDP, but they are not the primary determinant of GDP in the model.

The Key Idea of the Aggregate Expenditure Model Is That