Chapter 21

Question 1

Desired Aggregate Expenditure (denoted by ?) :

Answer 1

Total sum of desired spending in the economy. Denoted by subscript ‘a’.

Question 2

AE formula:

Answer 2

(all with subscript A) : C+I+G+ (X-IM)

Question 3

Autonomous expenditure vs induced expenditure:

Answer 3

expenses that do not change or are not affected by national income or level of real GDP, and vice versa for induced expenditures.

Question 4

Savings

Answer 4

All disposable income not spent on consumption.