The level of aggregate expenditures in the private closed economy is determined by the
A) expenditures of consumers and businesses.
B) intersection of the saving schedule and the 45-degree line.
C) equality of the MPC and MPS.
D) intersection of the saving and consumption schedules.

Question

Quizplus · Accepted Answer

Aggregate expenditures in a private closed economy are determined by the expenditures of consumers and businesses, as they make up the bulk of spending in such an economy. Choice B refers to the determination of equilibrium income in a closed economy, while Choice C refers to the relationship between the MPC and MPS in determining the magnitude of the spending multiplier. Choice D is not a relevant determinant of aggregate expenditures in a closed economy.

The Level of Aggregate Expenditures in the Private Closed Economy