What are examples of aggregate expenditures?

The aggregate expenditure equals the sum of the household consumption (C), investments (I), government spending (G), and net exports (NX).

What are the components of aggregate expenditures?

Recall that aggregate expenditure is the sum of four parts: consumer expenditure, investment expenditure, government expenditure and net export expenditure. A key part of the Income-Expenditure model is understanding that as national income (or GDP) rises, so does aggregate expenditure.

How do you calculate aggregate expenditure?

Key Points. The aggregate expenditure is the sum of all the expenditures undertaken in the economy by the factors during a specific time period. The equation is: AE = C + I + G + NX. The aggregate expenditure determines the total amount that firms and households plan to spend on goods and services at each level of income.

What are the four types of aggregate expenditure?

There are four types of expenditures: consumption, investment, government purchases and net exports. Each of these expenditure types represent the market value of goods and services.

What does aggregate expenditure mean?

In economics, aggregate expenditure (AE) is a measure of national income. Aggregate expenditure is defined as the current value of all the finished goods and services in the economy. The aggregate expenditure is thus the sum total of all the expenditures undertaken in the economy by the factors during a given time period.

What happens if GDP exceeds aggregated expenditures?

It is the total of the market prices or the values of all the final goods and the services produced in the economy. When the economy is private as well as closed, then the GDP is more than the aggregate expenditure, then the savings from the household exceed the planned investment.