EC140 Chapter Notes - Chapter 21: National Income And Product Accounts, Disposable And Discretionary Income, Autonomous Consumption

• School: WLU
• Department: Economics
• Course: EC140
• Professor: Ken Jackson

Document Summary

Refers to what people desire to spend out of the resources that they actually have. Look at four main groups of decision makers: Desired aggregate expenditure (ae): sum of desired/planned spending on domestic output by households, forms, governments and foreigners. Ae = c + i + g + (x im) National income accounts measure actual expenditures in each of the 4 expenditure categories. Our model of the macro economy also deals with desired expenditures in each of the categories. Autonomous expenditure: ele(cid:373)e(cid:374)ts of e(cid:454)pe(cid:374)diture that do(cid:374)"t cha(cid:374)ge s(cid:455)ste(cid:373)aticall(cid:455) with (cid:374)atio(cid:374)al i(cid:374)co(cid:373)e: (cid:272)a(cid:374) a(cid:374)d do (cid:272)ha(cid:374)ge, (cid:271)ut do(cid:374)"t o(cid:272)(cid:272)u(cid:396) s(cid:455)ste(cid:373)ati(cid:272)all(cid:455) i(cid:374) (cid:396)espo(cid:374)se to (cid:272)ha(cid:374)ges i(cid:374) (cid:374)atio(cid:374)al i(cid:374)(cid:272)o(cid:373)e. Induced expenditure: any component of expenditure that is systematically related to national income: plays a key role in the determination of equilibrium national income. Disposable income: amount of income households get after deducting what they pay in taxes and adding what they get in transfers = yd.