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Aggregate demand is written as C + I + G + X minus M. What do these four letters stand for?
AConsumption, investment, government spending, net exports
BCurrency, interest, growth, and margin
CConsumption, inflation, GDP, and marginal cost
DCapital, income, government debt, money supply
Answer & Solution
Correct answer: A. Consumption, investment, government spending, net exports
1. The formula lists the four spending components that together make up total spending in the economy.
2. C is consumption, I is investment, G is government spending, and X minus M is net exports.
3. Each letter stands for a spending category, not a price, interest rate, or debt figure.
4. Only option A correctly names all four components in order.
_Source: OpenStax Principles of Macroeconomics for AP Courses (CC BY 4.0), Ch 10 "The Aggregate Demand/Aggregate Supply Model", section 10.2 | Building a Model of Aggregate Demand and Aggregate Supply_
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