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Total income depends on total employment which depends on effective demand which in turn depends on consumption expenditure and investment expenditure. Consumption depends on income and propensity to consume. Investment depends upon the marginal efficiency of capital and the rate of interest. J. M. Keynes made it clear that the level of employment depends on aggregate demand and aggregate supply. The equilibrium level of income or output depends on the relationship between the aggregate demand curve and aggregate supply curve. As Keynes was interested in the immediate problems of the short run, he ignored the aggregate supply function and focused on aggregate demand. And he attributed unemployment to deficiency in aggregate demand.
The total amount that households and businesses receive before taxes and other expenses are deducted is called aggregate income.
GDP would be the amount of gross income a person or company receives. This would be the amount of income minus the amount of expenditure on things like bills.
the multiplier is zero.
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.
It's spelled "aggregate" and here is an example from Merriam-Webster:"The university receives more than half its aggregateincome from government sources."
Personal taxation is a amount taken by the Government or State from an individuals income. A cut in taxes would mean that people effectively have more income, therefore more income can be spent on goods and services. This ability for consumers to spend more means that they will demand more, shifting the aggregate demand curve to the right. It is the same in a business sense. If there was to be tax cuts for businesses, businesses have the ability to spend more in turn increasing aggregate demand. ~MB
Macro Economics is not considering only the out put without having any input. Macroeconomics is that branch of Economics which study the overall economic system or entire economy or aggregate variables. Such as total or national income(for Afghanistan 13 bn $), total employment(15 mn), total or aggregate saving, aggregate supply and demand and general price(6%). •Macroeconomics deals with aggregates of variables or quantities(total) and not with individual quantities, deals with national income and not with individual income, deals with general price level and not with individual prices, deals with national output and not with individual output'.
The tax rates on household income.
the function that represents total spending in an economy at a given level of real disposable income.
Transfer payments and taxes affect aggregate spending indirectly by first changing disposable income and thereby changing consumption.
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Raise aggregate expenditure by raising disposable income, thereby increasing consumption.
The equation for aggregate demand proposed by the Mundell-Fleming model of a large open economy is Y = C(Y - T) + I(r) + G + NX(e). Y represents income or output. C(Y - T) represents consumption as a function of disposable income, defined as income less taxes.
What increases, decreases and stays the same during a economic expansion? Choices: tax revinue, consumer income, budget surplus, aggregate demand, budget deficit, aggregate supply, real GDP, corporate profits
substitution effect is the explanation for the downward slope of the aggregate damnd curve.
1. Interest Rates 2. The Price Level 3. Real National Income
Reduced unemployment leads to inflation by way of increased income, purchasing power, aggregate demand and prices.
Non-discretionary policies are ones that automatically happen. A progressive income tax and the welfare system both act to increase aggregate demand in recessions and to decrease aggregate demand in overheated expansions. Discretionary policies are those that the government chooses to do in response to conditions -- e.g. enact a tax rate cut.
R. Gausden has written: 'The importance of income volatility in forecasting aggregate consumers' expenditure in the U.K' 'Real wages and employment'
Micro-economics needs the help of Macro-economics.for example,the sale of a firm not only depends own it price but also the total purchasing power of the commodity.the value of profit or a firm depend on aggregate demand.national income and general price level.Similarly,the help of micro-economics is inevitable for macro-economics.For example,nation output and income are the sum the income of income of millions of individuals and numerous firms respectably.Hence,the theory of the study of individual units and aggregate are both equally important.To conclude in the words of P.A. Samuelson,"There is really no opposition between micro-economics and macro-economics.Both are absolutely vital.You are less than half-educated if you understand the one while being ignorant of the other.
Expansionary fiscal policy is an increase in government spending or a reducing in net taxes which increase aggregate output/income (Y). +G or -T = +Y
Its a line lol A guideline used in Keynesian economics in conjunction with the consumption line (to derive saving) and the aggregate expenditures line (to identify Keynesian equilibrium). This guideline forms a 45-degree angle with both the horizontal income axis and the vertical consumption expenditure (or aggregate expenditures) axis in the Keynesian graphical analysis.
D. W. Henderson has written: 'The distribution and evolution of Canadian family incomes, 1965-1973' -- subject(s): Family, Income 'Decomposition of an aggregate measure of income distribution' -- subject(s): Income distribution, Mathematical models
Income as a direct affect on business. the purchasing power of an individual depends upon his/her disposable income (income-taxes). when income is more they will purchase more and vice verse. So when the aggregate income of the people will fall, the demand for the products and services will decrease which will in turn result in low sales as well as profit of a business.
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