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No effect. Spending will decrease Aggregate Demand, lower taxes will raise Aggregate Demand
Total income in the economy must always equal total spending. :)
This is established where aggregate quantity supplied is equal to aggregate quantity demanded. It is the central tendency of real income that equates the plans of consumers with those of producers. It is a stable level of income, so long as the various factors in the model DO NOT change.
Because every dollar of spending by a buyer is a dollar of income for a seller
For an economy as a whole, income must equal expenditure because:u Every transaction has a buyer and a seller.u Every dollar of spending by some buyer is a dollar of income for some seller.
One man's income is another man's expenditure. The expenditure of buyers on products is, by the rule of accounting, income to the sellers of those products. Every transaction that affects income must affect expenditure. If, for example, a company produces and sells one extra loaf of bread. This transaction will raise total expenditure on bread, but it also has an equal effect on income. If the company produces the extra loaf without hiring any more labour (such as making the production process more efficient), then profit increases. If the company produces the loaf by hiring more labour, then wages increase. In both cases, expenditure and income increase equally.
macroeconics equillibrium agregate supply and demand -2p+85 3p+25
An economy's income must be equal to it's expenditure because every transaction has a buyer and a seller. It is also because every dollar of spending by some buyer is a dollar of income for some seller. Gross domestic product (GDP) measures an economy's total expenditure on newly produced goods and services and the total income earned from the production of these goods and services.
There is a direct proportional relationship between aggregate expenditure and real GDP. Aggregate expenditure is actually equal to real GDP. This is different from the planned expenditure.
That would do it for me, but unfortunately for me my net income is equal to my gross income minus taxes.
equal proportion
you work an hour at McDonalds for $7.50. You value that hour, right? How much do you value it? You can tell by the income you received: $7.50. Income is the measure of value.