ECO102H1 Lecture Notes - National Income And Product Accounts, Disposable And Discretionary Income, Consumption Function
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ECO102H1 Full Course Notes
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Document Summary
The national accounts divide actual gdp into its components: - ca, ia , ga, and nxa. Total desired expenditure is divided into the same categories: Desired aggregate expenditure (ae): the sum of desired or planned spending of domestic by households, firms, government, and foreigner. The sum is called desired aggregate expenditure: ae = c + i + g + nx. Desired expenditure need not equal actual expenditure, either in total or in any individual category. Sometimes in cases actual expenditure can exceed the desired expenditure. National income accounts measure actual expenditures in each of the four expenditure categories. National income theory deals with desired expenditure in each of these four categories. Autonomous expenditure: elements of expenditure that do not change systematically with national income. Autonomous expenditure can and do a change , but such changes do not occur systematically in response to changes in national income. Induced expenditure: any component of expenditure that is systematically and related to national income.
