In a closed economy, aggregate expenditure is

A. equal to consumption plus savings plus taxes.

B. equal to Gross Domestic Product (GDP).

C. equal to full-employment output.

D. equal to consumption plus investment plus government spending.

The correct option is D

Explanation:

Aggregate expenditure is the aggregate of all the expenditures which is undertaken in the economy by the factors during a particular period of time.

When the economy is closed, the aggregate expenditure will be equal to the:

Aggregate Expenditure = Consumption + Investment + Government spending

OR

AE = C + I + G

It determine or evaluate the aggregate amount which households and firms plan to spend on the goods and services at the every level of the income.