Question

how gdp is determine in a 4 sector economy explain using aggregate expenditure and aggregate output approach

Answer 1

Aggregate expenditure is the sum of all the expenditures undertaken in the economy by the factors during a specific time time period as in the equation below:

$AE=C+I+G+(X-M)$

Where:

C= Consumption.

I= Investment.

G= Government spending.

X= Exports

M= Imports.

Aggregate expenditure is the current value of all the finished goods and services (total output).