Question:
In a two-sector economy, the Aggregate Demand can be determined by adding ............ and ...............
In a two-sector economy, the Aggregate Demand can be determined by adding ............ and ...............
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In a two-sector economy, remember that Aggregate Demand consists of consumption and investment expenditures.
Updated On: Jul 1, 2025
- consumption, investments
- investments, savings
- consumption, savings
- savings, exports
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The Correct Option is A
Solution and Explanation
In a two-sector economy (consisting of households and firms), Aggregate Demand (AD) is the total demand for goods and services. It is determined by adding consumption expenditure (C) and investment expenditure (I). Thus, the correct relationship is:
\[
\text{AD} = C + I
\]
Therefore, the correct option is (A).
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