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8 Cards in this Set
- Front
- Back
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aggregate expenditures model
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occurred during the great depression when there were high unemployment and underutilized capital .
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investment schedule
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that shows the amounts business firms collectively intend to invest
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planned investment
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at each possible level of GDP an assumption is made that investment is independent of disposable income or real GDP
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Equilibrium GDp
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real GDP
aggregate expenditures consumption plu planned investment equal real gdp or C+Ig=GDP |
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unplanned changes in inventories
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equilibrium is achieved when planned investment equals saving
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multiplier effect
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the reason for this greater change
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open economy
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there are net exports which are defined as exports minus imports
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goverment purchases
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add to the aggregate expenditures schedule and increase equilibrium real GDP AN INCREASE IN These purchases has a multiplier effect
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