Practicing Success

Target Exam

CUET

Subject

Economics

Chapter

Macro Economics: Determination of Income and Employment

Question:

Select which of the following is not one of the components of Aggregate demand for final goods?

Options:

Ex - ante consumption

Ex - ante investment

Ex - post consumption

Government spending

Correct Answer:

Ex - post consumption

Explanation:

The answer is Ex - post consumption.

Aggregate demand is the total demand for goods and services in an economy at a given price level. It is made up of four components:

  • Ex-ante consumption: Consumption spending planned by households based on their current income and expectations about future income.
  • Ex-ante investment: Investment spending planned by firms based on their expectations about future profitability.
  • Government spending: Government purchases of goods and services.
  • Net exports: Exports minus imports.

Ex-post consumption is the actual consumption spending by households, which may differ from ex-ante consumption due to unexpected changes in income or wealth. Therefore, ex-post consumption is not a component of aggregate demand for final goods.