expenditure money paid out; an amount spent expenditure the act of spending money for goods or services expenditure the act of consuming something
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.
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.
autonomous onvestment cant be decreased
How does the leakages and injections in the aggregate expenditure model influence the level of GDP of an economy?
Aggregate expenditure refers to the total amount of spending in an economy, including consumption, investment, government spending, and net exports. Aggregate demand, on the other hand, represents the total quantity of goods and services that households, businesses, and the government are willing and able to buy at different price levels. In essence, aggregate expenditure is the total spending in an economy, while aggregate demand is the total demand for goods and services at various price levels.
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.
autonomous onvestment cant be decreased
How does the leakages and injections in the aggregate expenditure model influence the level of GDP of an economy?
Aggregate expenditure refers to the total amount of spending in an economy, including consumption, investment, government spending, and net exports. Aggregate demand, on the other hand, represents the total quantity of goods and services that households, businesses, and the government are willing and able to buy at different price levels. In essence, aggregate expenditure is the total spending in an economy, while aggregate demand is the total demand for goods and services at various price levels.
AE=C+I+G+(X-M)
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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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.
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.
Consumption, Investment, Government Expenditure and Net Exports
developmental expenditure in the country increases the purchasing power,aggregate deman and prices,resulying in increased imports
It is a diagrammatic representation of a model of aggregate demand determination based upon the locus ofequilibrium points in the aggregate expenditure sector (IS) and the monetary sector(LM).