Multiple choice

Net domestic expenditure is consumption expenditure plus

  1. net foreign investment

  2. net foreign investment plus net domestic investment

  3. net domestic investment

  4. replacement expenditure

Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Net domestic expenditure equals consumption expenditure plus net domestic investment. This represents total spending within the domestic economy on consumption and investment goods, excluding replacement expenditure (depreciation). Net domestic investment is gross investment minus depreciation. Net foreign investment relates to international transactions and is not part of domestic expenditure calculation.

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