What is difference between Autonomous Expenditure and Induced Expenditure?

Answer 1

AUTONOMOUS AND INDUCEDEXPENDITURE :

Autonomous expenditure is independent of

changes in real GDP, whereas induced expenditure

varies as real GDP changes. In general, a change in

autonomous expenditure creates a change in real

GDP, which in turn creates a change in induced

expenditure. The induced changes are at the heart

of the multiplier effect.

Induced expenditure is the sum of the components

of aggregate expenditure that change with

GDP.

♦ Autonomous expenditure is the sum of the components

of aggregate expenditure that do not

change when real GDP changes.