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20 September, 21:16

Which components of aggregate expenditure are influenced by real gdp?

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  1. 20 September, 22:14
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    Consumption and Imports

    Explanation:

    Two of the components of aggregate expenditure that are influenced by real GDP are consumption and imports.

    Firstly, consumption as a major component of aggregate expenditure is impacted by adjustment for real prices which reduces real income and by extension, consumption - because income is a determinant of consumption.

    Secondly, an increase in real GDP is an increase in aggregate demand of which imports are a component

    Hence, an increase in real GDP is an increase in planned expenditures and planned income
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