Summary
Summary ECON112: CHAPTER 6: AGGREGATE EXPENDITURES
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1) Which spending included hypotheticaltypes of are in a
private ,
closed economy
?
Consumption ,
Investment
2) 8he amount that ppl spend regardless much
of how income
they earn is
referred to as autonomous spending
3) 8th increase in
spending that results from a
higher income
is
referred to as induced
spending .
4) When does expenditure equilibrium occur
:
↳ when
aggregate expenditure =
national income
•
AE > National income
inventories ¥
•
AE < National income
inventories $ ( surplus )
5) When National income is above equilibrium
Rehe AE
faction below the Y AE line
• =
is
•
Injections are below leakages .
,Aggregate
Expenditures
, Autonomous ( expenditures )
spending
↳ 8ha portion
of total
spending that is
the
independent of level
of income .
↳ is the absolute minimum level
of spending
that occurs .
Induced spending
↳ a
good portion of consumption is induced
by higher income levels .
( MBC )
Marginal propensity to consume
↳ Rehe extra
proportion of consumer
spending that results
from higher income
( MIS )
Marginal propensity to save
↳ the ratio
of the
change in
savings to the
corresponding change in income .
Marginal propensity to expend ( MRE )
↳ Dhe ratio
of change in expenditures that results
from a
change in income .
Wealth
effect
↳ tone direct
effect of a change in wealth on
consumption spending
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