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AGGREGATE EXPENDITURE EQUATION: An equation indicating that aggregate expenditures (AE) are the sum of consumption expenditures (C), investment expenditures (I), government purchases (G), and net exports (X-M), stated as: AE = C + I + G + (X-M). This equation surfaces in the Keynesian economic income-expenditure model in the form of the aggregate expenditures line. However, it's also central throughout the study of macroeconomics, including aggregate demand and the measurement of gross domestic product.
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WHAT? The allocation question that determines the types and quantities of goods and services produced with society's limited resources. What goods and services are produced with society's limited resources? This is one of three basic questions of allocation. The other two are How? and For Whom?
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Cyrus McCormick not only invented the reaper for harvesting grain, he also invented the installment payment for selling his reaper.
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"The majority of men meet with failure because of their lack of persistence in creating new plans to take the place of those that fail. " -- Napoleon Hill, author
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MPS
Marginal Propensity to Save
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