Aggregate demand for final goods in an economy is generated though which of the following 1 Consumpt...........

Economic Affairs Growth and Indicators

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Aggregate demand for final goods in an economy is generated though which of the following?

1. Consumption expenditure

2. Investment expenditure

3. Government expenditure

Select the correct answer using the code given below.

1 and 2 only

2 and 3 only

1 only

1, 2 and 3

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Explanation:

Aggregate demand refers to the total demand for final goods and services in the economy. It is measured by total expenditure of the community on goods and services and consists of ex ante consumption, ex ante investment, government spending etc.

Ex-ante Consumption Expenditure refers to planned (desired) consumption expenditure of households.

Ex-ante Investment Expenditure refers to planned investment expenditure on creation of new capital assets like machines, buildings.

Government spending refers to government planned (ex-ante) expenditure on purchase of consumer and capital goods to fulfill common needs of the society.