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Why does aggregate income equal aggregate expenditure?
Aggregate income equals aggregate expenditure because, in an economy, every dollar spent on goods and services (expenditure) generates an equivalent dollar of income for someone (income). This relationship is rooted in the circular flow of income and expenditure, where households receive income from firms in exchange for labor and then spend that income on goods and services produced by those firms. Thus, total spending in the economy matches total income generated, ensuring that aggregate income and aggregate expenditure are equal.
Why GDP equals aggregate expenditure and 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.
What are the 5 aggregate measures of national income?
Yea
What is Simple theory of Income Determination?
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.
What determines the magnitude of circular flow of income and expenditures?
Aggregate demand
Why does aggregate income equal aggregate expenditure?
Aggregate income equals aggregate expenditure because, in an economy, every dollar spent on goods and services (expenditure) generates an equivalent dollar of income for someone (income). This relationship is rooted in the circular flow of income and expenditure, where households receive income from firms in exchange for labor and then spend that income on goods and services produced by those firms. Thus, total spending in the economy matches total income generated, ensuring that aggregate income and aggregate expenditure are equal.
Why GDP equals aggregate expenditure and 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.
What are the 5 aggregate measures of national income?
Yea
What is Simple theory of Income Determination?
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.
What determines the magnitude of circular flow of income and expenditures?
Aggregate demand
Definition of equilibrium income?
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.
What happens to the income multiplier if the aggregate supply curve is vertical?
the multiplier is zero.
What sector of aggregate income is historically the most volatile segment of GDP?
investment
What is the aggregate expenditure function in terms of income?
the function that represents total spending in an economy at a given level of real disposable income.
An increase in aggregate demand is most likely to be caused by a decrease in?
The tax rates on household income.
What is equilibrium output?
It is the output of an economy that equates aggregate supply with aggregate demand.
What happens to aggregate income and withdrawals when exports increase?
there is no answer hahahaha / oh very intelligent - well done !!
