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X: The standard abbreviation for exports produced by the foreign sector and purchased by the domestic economy, 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, I, G, and (X - M) represent expenditures by the four macroeconomic sectors, household, business, government, and foreign. The United States, for example, sells a lot of the stuff produced within our boundaries to other countries, including wheat, beef, cars, furniture, and, well, almost every variety of product you care to name.
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                           GOVERNMENT PURCHASES LINE: A graphical depiction of the relation between government purchases by the government sector and the economy's aggregate level of income or production. This relation plays a key role in the study of Keynesian economics. A government purchases line is characterized by vertical intercept, which indicates autonomous government purchases, and slope, which is the marginal propensity for government purchases and indicates induced government purchases. The aggregate expenditures line used in Keynesian economics is derived by adding or stacking the government purchases line onto the consumption line, as well as investment expenditures and net exports. The government purchases line shows the relation between government purchases by the government sector and aggregate income or production. The income and production measures most commonly used are national income and gross domestic product. The purpose of the government purchases line is to graphically illustrate the government purchases-income relation for the government sector, which is then integrated into the aggregate expenditures line used in Keynesian economics.The government purchases line is commonly presented in one of two forms reflecting autonomous government purchases and induced government purchases. The simplest is a horizontal government purchases line, one with a zero slope, that illustrates autonomous government purchases. With a horizontal line, government purchases are constant for all levels of aggregate income or production, hence autonomous and unaffected by income. A more realistic government purchases line is positively sloped, indicating a degree of induced government purchases. In this case, the vertical intercept, or Y-intercept, of the government purchases line marks autonomous government purchases and the slope represents induced government purchases. Of no small importance, the slope of the government purchases line is also the marginal propensity for government purchases (MPG). | Government Purchases Line | 
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The horizontal red line, labeled G in the exhibit to the right, indicates government purchases that are completely autonomous. There are no induced government purchases indicated by this line. The slope of the government purchases line is zero (MPG = 0). The intercept of this horizontal line indicates autonomous government purchases, which is $2 trillion in this case.An alternative government purchases line, one with induced government purchases, can be illustrated in the exhibit with a simple click of the [An Induced Line] button. The new red line, labeled G' in the exhibit, is positively sloped, indicating that a change in the level of income or production induces a change in government purchases. This new government purchases line actually indicates both induced government purchases and autonomous government purchases. The slope is induced government purchases and the intercept is autonomous government purchases. - Slope: The slope of this new government purchases line is positive, but less than one. In this case the slope is equal to 0.05, a $1 change in aggregate income or production induces a $0.05 change in government purchases. This positive slope indicates induced government purchases. Moreover, the slope of the line is also the marginal propensity for government purchases (MPG).
- Intercept: This new government purchases line, like the original line, intersects the vertical axis at a positive value of $2 trillion. And once again this indicates autonomous government purchases.
Recommended Citation:GOVERNMENT PURCHASES LINE, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2026. [Accessed: August 11, 2026].
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Today, you are likely to spend a great deal of time visiting every yard sale in a 30-mile radius trying to buy either storage boxes for your winter clothes or several magazines on time travel. Be on the lookout for the happiest person in the room.
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Okun's Law posits that the unemployment rate increases by 1% for every 2% gap between real GDP and full-employment real GDP.
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"I love the man who can smile in trouble, who can gather strength from distress and grow brave by reflection. " -- Thomas Paine, statesman
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