Question

State whether the following statements are True of False:
Consumption expenditure is the only component of aggregate demand.

• A. True
• B. False

Answer 1

The correct option is B False

Aggregate demand is the total demand for final goods and services in an economy at a given time. It specifies the amounts of goods and services that will be purchased at all possible price levels. It is measured as:

A.D. = C + I + G + (X-M)

where,

A.D. is Aggregate Demand

C is consumption expenditure

I is Investment expenditure

G is Government expenditure and

(X-M) are Net exports (expenditure on Exports)