Economics (McConnell), 18th Edition

Chapter 28: The Aggregate Expenditures Model

IN THIS CHAPTER YOU WILL LEARN:

1. How economists combine consumption and investment to depict an aggregate expenditures schedule for a private closed economy.



2. The three characteristics of the equilibrium level of real GDP in a private closed economy: aggregate expenditures = output; saving = investment; and no unplanned changes in inventories.



3. How changes in equilibrium real GDP can occur and how those changes relate to the multiplier.



4. How economists integrate the international sector (exports and imports) and the public sector (government expenditures and taxes) into the aggregate expenditures model.



5. About the nature and causes of "recessionary expenditure gaps" and "inflationary expenditure gaps."