For an Economy, Aggregate Demand Equals

question 41

Multiple Choice

For an economy, aggregate demand equals

• A) consumption plus investment plus government purchases plus exports.
• B) consumption plus investment plus government purchases plus (exports minus imports).
• C) consumption plus investment plus (taxes minus transfers) plus (exports minus imports).
• D) consumption plus investment plus government purchases plus (imports minus exports).

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Definitions:

Contingent Liability

A potential financial obligation that may arise in the future, dependent on the occurrence of certain events.

Liability

An obligation arising from past transactions or events, which may result in an outflow of resources embodying economic benefits.

Provision

An amount set aside in the accounts to cover a probable future expense or liability, recognized for known obligations of uncertain timing or amount.

Onerous Contract

A contract where the unavoidable costs of meeting the obligations exceed the economic benefits expected to be received from it.