Desire Aggregate Expenditure (AE) The sum of desired or planned spending on
domestic output by households, firms,
governments, and foreigners.
Autonomous Expenditure Elements of expenditure that do not change
systematically with national income.
Induced Expenditure Any component of expenditure that is
systematically related to national income.
Closed Economy An economy that has no foreign trade in
goods, services, or assets.
Saving All disposable income that is not spent on
Consumption Function The relationship between desired
consumption expenditure and all the
variables that determine it; in the simplest
case, the relationship between desired
consumption expenditure and disposable
Average Propensity to Consu