When calculating aggregate demand,government expenditure:
A) Includes income transfers.
B) Includes expenditures by the federal government but not state and local government.
C) Represents the largest component of aggregate demand for the United States.
D) Includes spending by federal,state,and local governments on goods and services.

Question

Quizplus · Accepted Answer

Government expenditure in calculating aggregate demand includes spending by federal, state, and local governments on goods and services. It does not include income transfers, and while it is a significant component, it is not necessarily the largest component of aggregate demand for the United States.

When Calculating Aggregate Demand,government Expenditure