The components of aggregate expenditure include
I. imports.
II. consumption.
III. government transfer payments.
A) I, II and III
B) II only
C) I and II
D) II and III

Question

Quizplus · Accepted Answer

Aggregate expenditure measures total spending in the economy and includes four components: consumption, investment, government spending, and net exports (exports minus imports). Therefore, imports are already included in the net exports component and do not need to be counted separately. Government transfer payments are not part of government spending, which is a separate component in aggregate expenditure. Therefore, the only components listed in the choices are consumption and imports, so the correct answer is Choice C, I and II.

The Components of Aggregate Expenditure Include