Term
| aggregate expenditure line |
|
Definition
| a relationship tracing, for a given price level, spending at each level of income, or real GDP; the total of C+I+G+(X-M) at each level of income, or real GDP |
|
|
Term
|
Definition
| a relationship that shows how much people plan to spend at each income level; this model identifies, for a give price level, where the amount people plan to spend equals the amount produced in the economy |
|
|
Term
| simple spending multiplier |
|
Definition
| the ratio of a change in real GDP demanded to the initial change in spending that brought it about; the numerical value of the simple spending multiplier is 1/(1-MPC); called simple because only consumption varies with income |
|
|
Term
| simple spending multiplier equation |
|
Definition
|
|
