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I: The standard abbreviation for investment expenditures by the business sector, especially when used in the study of macroeconomics. This abbreviation is most often seen in the aggregate expenditure equation, AE = C + I + G + (X - M), where C, G, and (X - M) represent expenditures by the other three macroeconomic sectors, household, business, and foreign.

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INVERSE: The mathematical notion that two variables change in the opposite directions, that is, an increase in X goes with a decrease in Y, or a decrease in X goes with an increase in Y. The alternative to an inverse relation is a direct relation, in which an increase in one variable goes with an increase in the other. Inverse relations are graphically illustrated by negatively-sloped curves, a common example being the demand curve.

     See also | graph | correlation | demand | law of demand | direct |


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SLOPE, GOVERNMENT PURCHASES LINE

The positive slope of the government purchases line is also termed the marginal propensity for government purchases (MPG). This slope is greater than zero but less than one, reflecting induced government purchases. The slope of the government purchases line affects the slope of the aggregate expenditures line and thus also affects the magnitude of the multiplier process.

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