Aggregate Demand and Its Components Quiz

The four components of aggregate demand are consumption, investment, government spending, and net exports.

Average propensity to consume (APC) represents the ratio of total consumption to total income.

Propensity to consume refers to the proportion of disposable income that is spent on consumption.

<p>Consumption, investment, government spending, and net exports.</p> Signup and view all the answers

<p>Investment refers to business spending on capital goods and productive investments.</p> Signup and view all the answers

<p>Propensity to consume refers to the proportion of disposable income that is spent on consumption. It can be represented as average propensity to consume (APC) or marginal propensity to consume (MPC).</p> Signup and view all the answers

<p>&quot;Macroeconomics&quot; by Gregory Mankiw.</p> Signup and view all the answers

<p>Net exports represent the difference between exports and imports.</p> Signup and view all the answers