"The aggregate expenditure model can be written in terms of four spending categories. Which equation shows the relationship between aggregate expenditure and the four spending categories?"

Aggregate expenditure (AE) = C + I + G + NX

Explanation:

Aggregate expenditure (AE) gives the total value of all finished goods and services available in an economy. From the equation above;

C = Consumption, defined as the total consumption of household over a period in view

I = Investment, which provides the total expenditure on capital goods

G = Government expenditure, which provides the total spend  by all arms of government; federal, state, and local government.

NX = Net exports, which provides a value for the total exports less the total imports.

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