Without the Government or the Foreign Sector in the Income-Expenditure

question 288

Multiple Choice

Without the government or the foreign sector in the income-expenditure model, consumption equals

• A) planned aggregate expenditures plus actual investment.
• B) planned aggregate expenditures minus inventory adjustment.
• C) planned aggregate expenditures plus planned investment.
• D) planned aggregate expenditures minus planned investment.

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Definitions:

Gross Investment

The total amount spent on purchases of new capital assets and replacement of depreciated assets within a specified period.

Net Investment

The total spending on new capital minus the replacement of depreciated capital, indicating the actual addition to the capital stock in an economy.

GDP Deflator

An economic metric that converts the gross domestic product (GDP) from current market prices into constant dollar terms in order to measure the real growth of an economy, excluding the effect of inflation.

GDP Deflator

An economic measure of inflation that reflects changes in the price level of all goods and services produced domestically, adjusting nominal GDP into real GDP.