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Consider the Equation: AE = C + I + G

Question 1

Multiple Choice

Consider the equation: AE = C + I + G + (X - IM) .Which of the following statements correctly describes this sum?


A) This summation tells us total desired expenditures on domestically produced output.
B) It is a summation of actual expenditures and is equivalent to GDP.
C) This summation of planned expenditures is equal to actual nominal GDP.
D) It is a summation of planned expenditures and is always equal to real GDP.
E) It is a summation of the desired expenditures of domestic households,firms and government.

Correct Answer:

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