Aggregate Expenditure model
Describe Aggregate Expenditure model and also state AD/AS model?
Expert
Aggregate Expenditure(AE) is a a way to measure the Gross Domestic Product, GDP, or National Income (NI).It is a measure of the level of economic activity.
GDP = C + I + G + Xn, where
I = Ip + Iu.
AE = C + Ip + G + Xn, where
C = Consumption Expenditure (CE)Ip = Planned InvestmentIu = Unplanned InvestmentG = Government expenditureXn = Net Exports (Exports-Imports)
AE is also used in the Aggregate Demand-Aggregate Supply Model (AD/AS) and includes Price changes.
In the model, Aggregate Expenditure (AE) is defined as the amount that firms and households plan to spend on goods and services at each level of income, which is nothing but the total of expenditures on consumption, investment, government expenses and net exports.
AD=C+I+G+X-M (function of price) AE=C+I+G+X-M (function of income) (DR Kevin LTL) AD increase with National Output, and rising Disposable Income (DI). If the present output exceeds the equilibrium, then the inventories will accumulate; encouraging businesses to slow down or stop production. This will move the economy towards equilibrium. Again, if the level of production is below the equilibrium, inventories will decrease, causing an increase in production and hence, moving toward equilibrium. This equilibration process continues to occur when the equilibrium is stable.
If the liability to give a tax is on one person and the burden of tax fall on some other person, state the kind of tax? Answer: These are indirect taxes like sales
Describe whether the sale of old scooter is comprised in national income?
What are the “powers of the Federal Reserve
Relevance of matter: Relevance of matter is very much important while choosing any goals. Are the goals relevant to the vision of the company? A goal of having maximum number of customers seems fantabulous, however at the same time bank needs to make
Question: Compare and contrast 'adaptive expectations' (Hubbard uses adaptive expectations) and 'rational expectations' in modeling expectations. Answer:<
What is the difference between profit and producer surplus?
Why is recovery of loans taken as a capital receipt? Answer: Recovery of loans is always treated as a capital receipt since it leads to refuse in financial assets o
Question: Why might it be difficult for the Fed to formally adopt inflation targeting? Would inflation targeting be a good policy for the Fed in the present economic environment? Q : Borrowings and recovery of loans Categorize the borrowings and recovery of loans into capital and revenue receipts of government budget. Give reason too.
Categorize the borrowings and recovery of loans into capital and revenue receipts of government budget. Give reason too.
discuss with the help of IS-LM model why money has no effect on output in classical supply case
18,76,764
1928315 Asked
3,689
Active Tutors
1460200
Questions Answered
Start Excelling in your courses, Ask an Expert and get answers for your homework and assignments!!