ECON 110 Chapter Notes - Chapter 21: Real Interest Rate, Disposable And Discretionary Income, Consumption Function

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ECON 110 Full Course Notes
ECON 110 Full Course Notes
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Desired expenditure refers to what people desire to spend out of the resources they actually have: there are the same groups as expenditure, but they do not have the a" subscript after the letter. The four main groups of decision makers are: domestic households, firms, governments, foreign purchasers of domestically produced commodities. The sum of desired expenditures on domestically produced output by the four groups is known as desired aggregate expenditure (ae) Desired aggregate expenditure (ae): the sum of desired or planned spending on domestic output by households, firms, governments, and foreigners. Desired expenditure does not need to equal actual expenditure. Ae = c + i + g + (x im) National income accountants measure actual expenditures in each of the four expenditure categories. Autonomous expenditure: elements of expenditure that do not change systematically with national income: these can and do change, but the changes do not occur in response to changes in national income.