Without the government or the foreign sector in the income-expenditure model, planned aggregate expenditure equals
A) consumption plus actual investment.
B) consumption plus inventory adjustment.
C) consumption minus planned investment.
D) consumption plus planned investment.

Question

Quizplus · Accepted Answer

Planned aggregate expenditure (PAE) is the total planned spending in an economy at a given price level. In the absence of government or foreign sector in the income-expenditure model, PAE would be equal to consumption expenditure (C) plus planned investment expenditure (I). Therefore, the correct answer is D, which is consumption plus planned investment.

Without the Government or the Foreign Sector in the Income-Expenditure