When calculating aggregate demand,government expenditure:
A) Includes only federal government spending on goods and services.
B) Includes spending by federal,state,and local governments on goods and services.
C) Includes income transfers.
D) Represents the largest component of aggregate demand in the United States.

Question

Quizplus · Accepted Answer

Government expenditure includes spending by all levels of government (federal, state and local) on goods and services. It does not include income transfers such as social security and welfare payments. While government expenditure is a significant component of aggregate demand, it is not the largest component overall.

When Calculating Aggregate Demand,government Expenditure