Which of the following are components of aggregate demand?

(A) Autonomous Investment

(B) Autonomous Consumption

(C) Induced investment

(D) Induced consumption

Choose the correct answer from the options given below:

Option 1 -> Excludes induced investment, but induced investment is a component of aggregate demand.

Option 2 -> Excludes induced consumption, but induced consumption is a component of aggregate demand.

Option 3 -> Includes all four components - autonomous investment, autonomous consumption, induced investment, and induced consumption.

Option 4 -> Excludes autonomous investment, but autonomous investment is a component of aggregate demand.

Hence, Option 3: (A), (B), (C) and (D) -> Aggregate demand consists of consumption (C) and investment (I) among other components. Both consumption and investment have two parts: autonomous (independent of income level) and induced (dependent on income level). Autonomous consumption occurs even at zero income, while induced consumption varies with income. Similarly, autonomous investment is independent of income, while induced investment depends on income/output levels. Therefore, all four - autonomous consumption, induced consumption, autonomous investment, and induced investment - are valid components of aggregate demand. -> correct