ECON 110 Chapter Notes - Chapter 21: National Income And Product Accounts, Disposable And Discretionary Income, Expenditure Function

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12 Feb 2018
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ECON 110 Full Course Notes
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Desired aggregate expenditure the su(cid:373) of people"s desired e(cid:454)pe(cid:374)ditures o(cid:374) do(cid:373)esti(cid:272)all(cid:455) produced output: ae = c + i + g + (x im) National income accounts measure actual expenditure in each of the four expenditure categories. Our model of the macro economy deals with both actual and desired expenditure. Induced expenditure: autonomous expenditures components of aggregate expenditures that do not depend on national income. Induced expenditures - components of aggregate expenditures that do change systematically in response to changes in national income. The amount of income households receives after deducting what they pay in taxes is called disposable income: savings all disposable income that is not spent on consumption. By definition, there are only two possible uses of disposable income consumption and saving. When the household decides how much to put to one use, it has automatically decided how much to put to the other use.

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