Aggregate demand for final goods consists of Government spending.

Here's why:

• Aggregate Demand: This is the total demand for all goods and services produced in an economy at a given time and price level.
• Components of Aggregate Demand:
  • Consumption (C): Spending by households on goods and services.
  • Investment (I): Spending by businesses on capital goods (equipment, machinery, etc.).
  • Government Spending (G): Spending by the government on goods and services (e.g., infrastructure, defense).
  • Net Exports (X - M): Exports (X) minus Imports (M).

Therefore, government spending is a key component of aggregate demand.

• Savings: Savings represent income that is not spent and therefore do not directly contribute to aggregate demand in the current period.
• Imports: Imports represent spending on goods and services produced in other countries, which reduces domestic aggregate demand.
• Taxes: Taxes are payments to the government and directly reduce disposable income (income available for spending), thus indirectly affecting aggregate demand.