Economics
AGGREGATE EXPENDITURES:
The total expenditures on gross domestic product undertaken in a given time period by the four sectors--household, business, government, and foreign. Expenditures made by each of these sectors are commonly termed consumption expenditures, investment expenditures, government purchases, and net exports. Aggregate expenditures (AE) are a cornerstone in the study of macroeconomics, playing critical roles in Keynesian economics, aggregate market analysis, and to a lesser degree, monetarism. In particular, aggregate expenditures are combined with the price level as aggregate demand.
Aggregate expenditures are the total expenditures on gross domestic product. These expenditures are used by the household, business, government, and foreign sectors to purchase all of the gross domestic product supplied by the domestic economy. These combined expenditures are a key part of the foundation of macroeconomic analysis orunemployment, inflation, business cycles, and other phenomena
Aggregate expenditures are related to, but different from, aggregate demand. The difference between aggregate expenditures and aggregate demand is much like the difference between quantity demanded andmarket demand. Like quantity demanded, aggregate expenditures are expenditures at a given price level. And like market demand, aggregate demand is the whole range of expenditures at a range of price levels.
The Aggregate Expenditures Equation
The following equation is commonly used to summarize the four components that make up aggregate expenditures: AE | = | C | + | I | + | G | + | (X | - | M) |
The notation used here is relatively straight forward. AE is aggregate expenditures; C is consumption expenditures by the household sector; I isinvestment expenditures on capital goods by the business sector; G isgovernment purchases; and (X - M) is net exports, with X being exports and M being imports.
Business Cycles and Stabilization Policies
Aggregate expenditures play a
The total expenditures on gross domestic product undertaken in a given time period by the four sectors--household, business, government, and foreign. Expenditures made by each of these sectors are commonly termed consumption expenditures, investment expenditures, government purchases, and net exports. Aggregate expenditures (AE) are a cornerstone in the study of macroeconomics, playing critical roles in Keynesian economics, aggregate market analysis, and to a lesser degree, monetarism. In particular, aggregate expenditures are combined with the price level as aggregate demand.
Aggregate expenditures are the total expenditures on gross domestic product. These expenditures are used by the household, business, government, and foreign sectors to purchase all of the gross domestic product supplied by the domestic economy. These combined expenditures are a key part of the foundation of macroeconomic analysis orunemployment, inflation, business cycles, and other phenomena
Aggregate expenditures are related to, but different from, aggregate demand. The difference between aggregate expenditures and aggregate demand is much like the difference between quantity demanded andmarket demand. Like quantity demanded, aggregate expenditures are expenditures at a given price level. And like market demand, aggregate demand is the whole range of expenditures at a range of price levels.
The Aggregate Expenditures Equation
The following equation is commonly used to summarize the four components that make up aggregate expenditures: AE | = | C | + | I | + | G | + | (X | - | M) |
The notation used here is relatively straight forward. AE is aggregate expenditures; C is consumption expenditures by the household sector; I isinvestment expenditures on capital goods by the business sector; G isgovernment purchases; and (X - M) is net exports, with X being exports and M being imports.
Business Cycles and Stabilization Policies
Aggregate expenditures play a