Question : The term "aggregate demand" refers to the total demand for:
Option 1: Individual goods and services
Option 2: All goods and services in an economy
Option 3: Imports and exports
Option 4: Government expenditure
Correct Answer: All goods and services in an economy
Solution : The correct answer is (b) All goods and services in an economy
Aggregate demand represents the total demand for all goods and services within an economy at a given price level and over a specific period. It encompasses the combined demand from all sectors, including individuals, households, businesses, and the government. It reflects the total spending or expenditure on goods and services within an economy, regardless of whether they are produced domestically or imported.
While individual goods and services have their own specific demands, aggregate demand captures the overall demand for all goods and services in the economy as a whole. It includes private consumption expenditure, private investment expenditure, government expenditure, and net exports (exports minus imports). Therefore, option b) correctly identifies that aggregate demand refers to the total demand for all goods and services in an economy.
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
Question : ____________________ refers to the total value of final goods and services which all the sectors of an economy are planning to buy at a given level of income during a period of one year.
Option 1: Aggregate demand
Option 2: Aggregate supply
Option 3: Total expenditure
Option 4: Total demand
Question : ____________ refers to the total expenditure incurred by government on consumer goods and capital goods to satisfy the common needs of the economy.
Option 1: Private final consumption expenditure.
Option 2: Government final consumption expenditure.
Option 3: Investment expenditure.
Option 4: Net exports
Question : ____________ refers to the total expenditure incurred by households on purchase of goods and services during an accounting year.
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
Regular exam updates, QnA, Predictors, College Applications & E-books now on your Mobile