Aggregate Demand Components

Steps:

• Recall aggregate demand (AD) as total spending in an economy.
• Identify standard components: household consumption (C), business investment (I), government spending (G), and net exports (X - M).
• Note net exports formula: exports minus imports.
• Match to choices: A lists C + I + G + (X - M).

Why A is correct:

• AD formula is C + I + G + (X - M), where net exports account for trade balance.

Why the others are wrong:

• B: Taxation reduces demand, not a direct component.
• C: Saving withdraws from demand; incorrect net exports sign.
• D: Saving and tax are leaks, not additions; wrong net exports.

Final answer: A