The correct answer is e) saving.
Aggregate demand is a crucial concept in economics that measures the total demand for goods and services in an economy at a given overall price level and in a given time period. It is composed of four primary components: government spending, investment, consumption, and net exports.
1. Government Spending: This includes all government expenditures on goods and services, which can influence overall economic activity.
2. Investment: This refers to business investments in capital goods that can enhance productivity and economic growth.
3. Consumption: This is the total spending by households on goods and services, a major driver of economic activity.
4. Net Exports: This is the difference between a country’s exports and imports, which also affects overall demand in the economy.
On the other hand, savings represents the portion of income that is not spent on consumption. While savings are important for investment in the long run, they are not a direct component of the aggregate demand curve. Instead, savings affect the economy indirectly through the availability of funds for investment, but they are not counted when calculating aggregate demand.