EC140 Lecture Notes - Lecture 18: Vise, Savings Account, Autarky
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EC140 Full Course Notes
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Desired aggregate expenditure: the sum of desired or planned spending on domesic output by households, irms, governments, and foreigners. The naional income accounts measure actual expenditures in each of the four expenditure categories. Autonomous expenditure: elements of expenditure that do not change systemaically with naional income. Induced expenditure: any component of expenditure that is systemaically related to naional income. Closed economy: an economy that has no foreign trade in goods, services, or assets. In this chapter we make three basic assumpions: there is no trade with other countries it is a closed economy, there is no government no taxes, the price level is constant. Saving: all disposable income that is not spent on consumpion. Disposable income: the amount of income households received ater deducing what they pay in taxes and adding what they receive in transfers. The two possible used of disposable income is saving and consumpion.