Aggregate Expenditure And Aggregate Demand

Aggregate Expenditure and Income ,[object Object],[object Object]

Aggregate Expenditures ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Aggregate Expenditures ,[object Object],[object Object]

Exhibit 1: Real GDP with Net Taxes and Government Purchases (trillions of dollars) ,[object Object],[object Object]

Exhibit 1: Real GDP with Net Taxes and Government Purchases (trillions of dollars) ,[object Object],[object Object],[object Object]

Real GDP Demanded ,[object Object],[object Object]

Real GDP Demanded ,[object Object]

Exhibit 2: Deriving the Real GDP Demanded for a Given Price Level ,[object Object],[object Object],[object Object]

Exhibit 2: Deriving the Real GDP Demanded for a Given Price Level Real GDP (trillions of dollars) 0 C + I + G + (X – M) 45º Aggregate expenditure (trillions of dollars) ,[object Object],[object Object],[object Object],e 12.0 12.0 11.0 a 11.0 11.2 b

Exhibit 2: Deriving Aggregate Output Real GDP (trillions of dollars) 0 C + I + G + (X – M) 45º d 13.0 12.8 13.0 c Aggregate expenditure (trillions of dollars) ,[object Object],[object Object],[object Object],e 12.0 12.0

Exhibit 3: Effect of an Increase in Investment C + I + G + (X – M) A g g r e g a t e e x p e n d i t u r e ( t r i l l i o n s o f d o l l a r s ) 0 12.0 12.5 12.0 e Real GDP (trillions of dollars) 12.5 45º 0.1 12.1 f g C + I' + G + (X – M) ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],k h i e' 12.1 j

Exhibit 4:Tracking the Rounds of Spending Following a $100 Billion Increase in investment (billions of dollars) ,[object Object],[object Object],[object Object],[object Object],8  New Spending Cumulative New Saving Cumulative Round This Round New Spending This Round New Saving 1 100 100 - - 2 80 180 20 20 3 64 244 16 36 10 13.4 446.3 3.35 86.6 0 500 0 100

Simple Spending Multiplier ,[object Object],[object Object],[object Object],[object Object]

Simple Spending Multiplier ,[object Object],[object Object],[object Object],[object Object],[object Object]

Simple Spending Multiplier ,[object Object],[object Object],[object Object]

Deriving the Aggregate Demand Curve ,[object Object],[object Object],[object Object]

A Higher Price Level ,[object Object],[object Object],[object Object],[object Object],[object Object]

Exhibit 5: Income-Expenditure and Aggregate Demand 0 Real GDP (trillions of dollars) 0 140 Aggregate expenditure (trillions of dollars ) Real GDP (trillions of dollars) 45° (a) Income-expenditure model (b) Aggregate demand curve ,[object Object],[object Object],Price level e AE ( P = 130) e 130 12.0 12.0

Exhibit 5: Income-Expenditure and Aggregate Demand 0 Real GDP (trillions of dollars) Aggregate expenditure (trillions of dollars) AE' (P = 140) e' 11.5 AE (P = 130) e 12.0 AE" (P = 120) e" 12.5 45° ,[object Object],[object Object],[object Object],[object Object],(a) Income-expenditure model 0 140 AD e' 11.5 e 130 12.0 Real GDP (trillions of dollars) 120 e" 12.5 Price level ( b) Aggregate demand curve

Aggregate Demand and Expenditures ,[object Object],[object Object],[object Object]

Multiplier and Aggregate Demand ,[object Object],[object Object]

Exhibit 6: Shifts in Aggregate Expenditures and Aggregate Demand Aggregate expenditure (trillions of dollars) 0 12.0 Real GDP (trillions of dollars) C + I + G + (X – M) 45º e 0 12.0 Real GDP (trillions of dollars) AD 130 Price level ,[object Object],[object Object],e e' (a) Income-expenditure model (b) Aggregate demand curve 12.5 e' C + I' + G + (X – M) 0.1 12.5 AD'

Limitations of the Multiplier ,[object Object],[object Object],[object Object]

Aggregate Expenditure And Aggregate Demand

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Aggregate Expenditure And Aggregate Demand