Question : In an open economy, aggregate demand is estimated as:
Option 1: Private consumption expenditure
Option 2: Private consumption expenditure + Government expenditure
Option 3: Private investment expenditure + Private consumption expenditure + Government expenditure
Option 4: Private consumption expenditure + Private investment expenditure + Government expenditure + Net exports
Correct Answer: Private consumption expenditure + Private investment expenditure + Government expenditure + Net exports
Solution : The correct answer is (d) Private consumption expenditure + Private investment expenditure + Government expenditure + Net exports
Net exports, which represent the difference between exports and imports, are indeed an important component of aggregate demand in an open economy. Thank you for pointing out the error, and I apologize for any confusion caused.
Question : The equilibrium in the aggregate market occurs when:
Option 1: Aggregate demand equals aggregate supply
Option 2: Consumption equals investment
Option 3: Government expenditure equals net exports
Option 4: Saving equals investment
Question : In the aggregate expenditure model, equilibrium occurs when aggregate expenditure is equal to:
Option 1: Consumption expenditure
Option 2: Investment expenditure
Option 3: Government expenditure
Option 4: Net exports
Question : Aggregate demand in a two sector model involves-
Option 1: Consumption and investment
Option 2: Investment and net exports
Option 3: Net exports and consumption
Option 4: Consumption and government
Question : Which of the following is not a component of aggregate demand?
Option 4: Savings
Question : Which of the following is an element of aggregate demand?
Option 1: Investment
Option 2: Savings
Option 4: Exports
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