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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.
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What is the relationship between aggregate expenditure and real GDP?
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.
How does the leakages and injections in the aggregate expenditure model influence the level of GDP of an economy?
How does the leakages and injections in the aggregate expenditure model influence the level of GDP of an economy?
What is equilibrium GDP?
In the short run, equilibrium GDP is the level of output at which output and aggregate expenditure are equal
What happens when aggregate planned expenditure exceeds real GDP?
If aggregate planned expenditure exceed real GDP, firms sell more than they planned to sell and end up with inventories being too low. vice versa if aggregate planned expenditure is less than real GDP, firms sell lessthan they planned to sell and end up with unplanned inventories.
What is difference between Autonomous Expenditure and Induced Expenditure?
AUTONOMOUS AND INDUCEDEXPENDITURE :Autonomous expenditure is independent ofchanges in real GDP, whereas induced expenditurevaries as real GDP changes. In general, a change inautonomous expenditure creates a change in realGDP, which in turn creates a change in inducedexpenditure. The induced changes are at the heartof the multiplier effect.Induced expenditure is the sum of the componentsof aggregate expenditure that change withGDP.♦ Autonomous expenditure is the sum of the componentsof aggregate expenditure that do notchange when real GDP changes.
What is the relationship between aggregate expenditure and real GDP?
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.
How does the leakages and injections in the aggregate expenditure model influence the level of GDP of an economy?
How does the leakages and injections in the aggregate expenditure model influence the level of GDP of an economy?
What is equilibrium GDP?
In the short run, equilibrium GDP is the level of output at which output and aggregate expenditure are equal
What happens when aggregate planned expenditure exceeds real GDP?
If aggregate planned expenditure exceed real GDP, firms sell more than they planned to sell and end up with inventories being too low. vice versa if aggregate planned expenditure is less than real GDP, firms sell lessthan they planned to sell and end up with unplanned inventories.
What is difference between Autonomous Expenditure and Induced Expenditure?
AUTONOMOUS AND INDUCEDEXPENDITURE :Autonomous expenditure is independent ofchanges in real GDP, whereas induced expenditurevaries as real GDP changes. In general, a change inautonomous expenditure creates a change in realGDP, which in turn creates a change in inducedexpenditure. The induced changes are at the heartof the multiplier effect.Induced expenditure is the sum of the componentsof aggregate expenditure that change withGDP.♦ Autonomous expenditure is the sum of the componentsof aggregate expenditure that do notchange when real GDP changes.
In the keynesian model of aggregate expenditure real GDP is determined by what?
The aggregate expenditure model relates aggregate expenditures, which is the sum of planned level of consumption + investment + government purchases + net exports at a given price level, to the level of GDP. The key word here is planned. GDP is the same as aggregate expenditures(AE) except for one difference. People, firms and governments don't always spend what they had planned. So AE differs from GDP in that it deals exclusively with amounts firms intend to invest, and not necessarily taking into account amounts that will actually be invested as in GDP Where GDP is defined as C + I + G + NX and I = Ip + Iu (planned + unplanned investment), Aggregate Expenditures is defined as C + Ip + G + NX. AE (Aggregate Expenditure) is used in conjunction with GDP in the Aggregate Expenditures Model to predict future GDP direction. In this model, when AE = GDP then the economy is in equilibrium. According to this model an economy will move towards its equilibrium causing changes in the GDP.
What gets included and excluded when calculating GDP?
total income and total expenditure are included when calculating GDP.
Compared with the expenditure approach to calculating GDP the income approach is?
more accurate
What is the income approach compared with the expenditure approach to calculating GDP?
more accurate
What sector of aggregate income is historically the most volatile segment of GDP?
investment
Is the value of the GDP calculated by the income approach equal to the value of GDP calculated by the expenditure method?
YES
What are the methods of calculating GDP?
expenditure approach and income approach & VALUE ADDED METHOD
