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AGGREGATE SUPPLY: The total (or aggregate) real production of final goods and services available in the domestic economy at a range of price levels, during a given time period. Aggregate supply (AS) is one half of the aggregate market analysis; the other half is aggregate demand. Aggregate supply, relates the economy's price level, measured by the GDP price deflator, and aggregate domestic production, measured by real gross domestic product. The aggregate supply relation is generally separated into long-run aggregate supply, in which all prices and wages and flexible and all markets are in equilibrium, and short-run aggregate supply, in which some prices and wage are NOT flexible and some markets are NOT in equilibrium.
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                           AGGREGATE EXPENDITURES EQUATION: An equation that summarizes the four aggregate expenditures on gross domestic product by the four macroeconomic sectors. In the study of Keynesian economics, this equation is commonly used to summarize the demand side of the macroeconomy. The aggregate expenditures equation actually comes in three different versions depending on how many of the four sectors and their expenditures are included. The aggregate expenditures equation is the sum of the four aggregate expenditures (consumption expenditures, investment expenditures, government purchases, and net exports). This equation provides a short-hand notion that summarizes the demand side of the economy.The general aggregate expenditures equation is: where: AE is aggregate expenditures, C is consumption expenditures, I is investment expenditures, G is government purchases, and X-M is net exports, exports (X) minus imports (M).This particular version of the aggregate expenditures equation is for all four macroeconomic sectors (household sector, business sector, government sector, and foreign sector). In some circumstances reduced versions, with fewer sectors, are more useful. A three-sector version that includes the household, business, and government sectors is: And the simplest aggregate expenditures equation is for the two private sectors--household and business. It is specified as:
Recommended Citation:AGGREGATE EXPENDITURES EQUATION, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2022. [Accessed: May 27, 2022].
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DCF
Discounted Cash Flow
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