ECON 209 Lecture Notes - National Income And Product Accounts, Consumption Function, Autonomous Consumption
28 Apr 2013
School
Department
Course
Professor
Document Summary
Desired expenditure refers to what people would like to buy with the resources they have, not under imaginary unlimited resources. Instead of subscripting an a to represent desired expenditure, there is no letter so c, g, i, g and (x- im) We look at 4 main decision makers: domestic households, firms, gov"t and foreign purchasers. Desire aggregate expenditure or ae= c + i + g + (x- im) National income accounts measures actual expenditures in each of four expenditure categories. National income theory deals with desired expenditure in these 4 categories. Autonomous expenditure: elements of expenditure that don"t change systematically w/ national income. They change but not b/c of national income. Induced expenditure: elements of expenditure that is systematically related to national income. We"re only focusing on consumption and investment in this chapter. Consumption is largest component of ae and provides most important link between desired aggregate expenditure and real national income.
