ECON 105 Chapter Notes - Chapter 21: National Income And Product Accounts, Consumption Function, Autonomous Consumption

• School: Simon Fraser University
• Department: Economics
• Course: ECON 105
• Professor: Seong- Jun Choi

Document Summary

Desired expenditure refers to what people desire to spend out of the resources that they actually have. Actual values: ca, ia, ga, and (xa ima) Desired expenditure: c, i, g and (x im) 4 main groups of decision makers: domestic households, firms, governments, foreign purchasers of domestically produced commodities. Desired aggregate expenditure (ae): the sum of desired or planned spending on domestic output by households, firms, governments, and foreigners: ae = c + i + g + (x im, actual expenditure. A firm may unintentionally invest in inventory accumulation if sales are low. National income accounts measure actual expenditures in each of the four expenditure categories. Our model of the macro economy also deals with desire expenditure in each of these four categories. Autonomous expenditure: elements of expenditure that do not change systematically with national income. An economy that has no foreign trade in goods, services, or assets: the pl is constant.