What term describes the purchasing of goods and services by individuals or families, constituting the largest part of aggregate demand?

Consumer expenditures refer to the total amount of money spent by households and individuals on goods and services for personal use. This category not only includes purchases of physical items like clothing and electronics but also services such as healthcare, education, and entertainment. It constitutes the largest part of aggregate demand because it reflects the daily consumption activities of the population, which directly impacts economic activity.

When people spend money, they drive businesses to produce more, thus stimulating economic growth. Consumer expenditures are crucial for understanding the overall health of an economy, as they can indicate levels of consumer confidence and spending ability. High levels of consumer spending suggest that individuals feel secure about their financial situation, which typically leads to more investment and greater economic expansion.