Question : Which of the following is an element of aggregate demand?
Option 1: Investment
Option 2: Savings
Option 3: Government expenditure
Option 4: Exports
Correct Answer: Government expenditure
Solution : The correct answer is (c) Government expenditure
Government expenditure is an element of aggregate demand. Aggregate demand represents the total demand for goods and services in an economy over a specific period. It is the sum of consumption expenditure, investment expenditure, government expenditure, and net exports.
Government expenditure refers to the spending by the government on public goods and services, such as infrastructure, education, healthcare, defense, and welfare programs. It includes both consumption expenditure by the government (e.g., salaries of public employees) and investment expenditure (e.g., spending on infrastructure projects).
Question : Which of the following is not a component of aggregate demand?
Option 1: Consumption expenditure
Option 2: Investment expenditure
Option 4: Savings
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 : 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 4: Net exports
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
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