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Which of the following indicates AD in an open economy?
Private (household) Consumption Expenditure
Household Investment Expenditure
Government expenditure + private consumption expenditure
Household consumption expenditure+ investment expenditure + government expenditure + net exports
- An open economy incorporates trade with other countries, which affects Aggregate Demand (AD).
- Option 1: Only involves private consumption. It doesn't reflect other components like investment, government spending, or trade.
- Option 2: Involves household investments only. It leaves out consumption, government spending, and net exports.
- Option 3: Includes government and private consumption spending. However, it omits investment and net exports.
- Option 4: Encompasses household consumption, investment, government spending, and net exports. This accurately reflects AD in an open economy, as it includes all crucial components.
By: santosh ProfileResourcesReport error
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