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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.
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.
Is it true for an economy as a whole. income equals expenditure because the income of the seller must be equal to the expenditure of the buyer?
Yes
Explain why an economy income must equal it's expenditure?
An economy's income must equal it's expenditure to keep its budget in balance. If the income is less, it results in debt which eventually has to be paid back.
What is equilibrium GDP?
In the short run, equilibrium GDP is the level of output at which output and aggregate expenditure are equal
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.
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.
Why aggregate income is equal to aggregate expenditure?
One man's income is another man's expenditure. The expenditure of buyers on products is, by the rule of accounting, income to the sellers of those products. Every transaction that affects income must affect expenditure. If, for example, a company produces and sells one extra loaf of bread. This transaction will raise total expenditure on bread, but it also has an equal effect on income. If the company produces the extra loaf without hiring any more labour (such as making the production process more efficient), then profit increases. If the company produces the loaf by hiring more labour, then wages increase. In both cases, expenditure and income increase equally.
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.
A decrease in net taxes will?
Raise aggregate expenditure by raising disposable income, thereby increasing consumption.
Is it true for an economy as a whole. income equals expenditure because the income of the seller must be equal to the expenditure of the buyer?
Yes
Explain why an economy income must equal it's expenditure?
An economy's income must equal it's expenditure to keep its budget in balance. If the income is less, it results in debt which eventually has to be paid back.
What is equilibrium GDP?
In the short run, equilibrium GDP is the level of output at which output and aggregate expenditure are equal
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.
According to the Multiplier Equation equilibrium income will be equal to the multiplier divided by autonomous expenditures?
Actually it is the change in the equilibrium expenditure divided by the change in autonomous expenditure. That will equal the expenditure multiplier.
Why an economy's income must equal to it's expenditure?
For an economy as a whole, income must equal expenditure because:u Every transaction has a buyer and a seller.u Every dollar of spending by some buyer is a dollar of income for some seller.
Is credit income or expenditure?
Credit is neither an income or an expenditure. It becomes an expenditure when you use it. expenditure
