Question : Which of the following is an element of aggregate demand?
Option 1: Investment
Option 2: Savings
Option 3: Government expenditure
Option 4: Exports
Correct Answer: Government expenditure
Solution : The correct answer is (c) Government expenditure
Government expenditure is an element of aggregate demand. Aggregate demand represents the total demand for goods and services in an economy over a specific period. It is the sum of consumption expenditure, investment expenditure, government expenditure, and net exports.
Government expenditure refers to the spending by the government on public goods and services, such as infrastructure, education, healthcare, defense, and welfare programs. It includes both consumption expenditure by the government (e.g., salaries of public employees) and investment expenditure (e.g., spending on infrastructure projects).
