Title: Aggregate Expenditure and Investment

Subject: Macroeconomics

Date: 4/14/24

<aside> <img src="/icons/question-mark_purple.svg" alt="/icons/question-mark_purple.svg" width="40px" /> QUESTIONS

• What is aggregate expenditure?
• What is the aggregate expenditure model?
• What is the aggregate expenditure equation?
• What is the difference between planned and actual investment?

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<aside> <img src="/icons/drafts_purple.svg" alt="/icons/drafts_purple.svg" width="40px" /> NOTES

• Aggregate expenditure
  • Aggregate expenditure model: a macroeconomic model that focuses on the short-run relationship between total spending and real GDP, assuming that the price level is constant
  • AE = C (consumption) + I (planned investment) + G (gov purchases) + NX (net exports)
• The difference between planned investment and actual investment
  • Planned investment spending, is a component of aggregate expenditure
  • Inventories: goods that have been produced but not yet sold </aside>

<aside> <img src="/icons/push-pin_purple.svg" alt="/icons/push-pin_purple.svg" width="40px" /> SUMMARY

• AE - short-run relationship between total spending and real GDP
• AE = C + I + G + NX
• Planned investment - component of AE </aside>