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In the closed economy the ex ante aggregate demand for final goods is the sum total of:

Solution

✅ Correct Option: 2

Option 1 -> Mixing ex ante consumption with ex post investment is conceptually incorrect for ex ante aggregate demand.

Option 2 -> Ex ante aggregate demand comprises planned consumption and planned investment expenditure.

Option 3 -> This represents ex post (actual) aggregate demand, not ex ante (planned) demand.

Option 4 -> Combining ex post consumption with ex ante investment is incorrect for defining ex ante aggregate demand.


Hence, Option 2: Ex ante consumption expenditure and ex ante investment expenditure on such goods -> Ex ante aggregate demand refers to the planned or intended demand for goods and services in an economy. In a closed economy (no exports or imports), it consists of two components: (1) Ex ante consumption expenditure - the amount households plan to spend on consumption goods, and (2) Ex ante investment expenditure - the amount firms plan to spend on capital goods. Since 'ex ante' means 'planned' or 'before the fact,' both components must be planned expenditures to constitute ex ante aggregate demand. This is distinguished from ex post aggregate demand, which represents actual realized expenditures after economic activity has occurred. -> correct

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