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INCOME-EXPENDITURE MODEL: A macroeconomic model, which captures the essence of Keynesian economics, is based on the equality between total income generated from gross domestic product and total expenditures on gross domestic product. The cornerstone of the income-expenditure model is the consumption function, which relates household consumption expenditures to income and gives rise to the aggregate expenditure line with the addition of investment, government purchases, and net exports. The intersection between the aggregate expenditure line at the 45-degree identifies equilibrium.
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INTEREST RATES, AGGREGATE EXPENDITURES DETERMINANT One of several specific aggregate expenditures determinants assumed constant when the aggregate expenditures line is constructed, and that shifts the aggregate expenditures line when it changes. A decrease in interest rates cause an increase (upward shift) of the aggregate expenditures line. An increase in interest rates cause a decrease (downward shift) of the aggregate expenditures line. Other notable aggregate expenditures determinants include consumer confidence, federal deficit, inflationary expectations, and exchange rates.
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Parker Brothers, the folks who produce the Monopoly board game, prints more Monopoly money each year than real currency printed by the U.S. government.
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"We must be willing to let go of the life we have planned, so as to have the life that is waiting for us. " -- E. M. Forster, writer
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M3
M2 plus investment types of near monies, including large denomination certificates of deposits, institutional money market deposits, and longer term repurchase agreements and Eurodollars
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