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AGGREGATE EXPENDITURE LINE: A line representing the relation between aggregate expenditures and gross domestic product used in the Keynesian cross. The aggregate expenditure line is obtained by adding investment expenditures, government purchases, and net exports to the consumption line. As such, the slope of the aggregate expenditure line is largely based on the slope of the consumption line (which is the marginal propensity to consume), with adjustments coming from the marginal propensity to invest, the marginal propensity for government purchases, and the marginal propensity to import. The intersection of the aggregate expenditures line and the 45-degree line identifies the equilibrium level of output in the Keynesian cross.

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PURE COMMAND ECONOMY:

An economy, or economic system, that relies exclusively on governments to allocate resources and to answer all three questions of allocation. This theoretical ideal has no markets, government makes all allocation decisions. Then contrasting theoretical ideal is a pure market economy in which markets make all allocation decisions.
Economic Systems
Economic Systems
A pure command economy is a theoretical extreme on the spectrum of economic systems that does not actually exist in the real world. It does, however, provide a benchmark that can be used for comparison with real world economic systems.

In pure command economies, governments force all allocation through involuntary taxes, laws, restrictions, and regulations. Governments set forth the laws and rules. If folks do not follow the rules, then they are punished. Governments can punish those who do not follow the rules because... well... because they are the governments. Given a choice, most humans probably would rather NOT pay taxes or have their cars safety inspected. They follow government rules because they have to, because that IS the law.

The real world embodiment of a pure command economy is termed a command economy. The communistic/socialist economies of China and the former Soviet Union are primary examples of command economies.

While, in theory, resource allocation could be undertaken exclusively through markets or governments, in the real world, all economies rely on a mix of both markets and governments for allocation decisions, what is termed a mixed economy.

<= PUBLIC SECTORPURE MARKET ECONOMY =>


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PURE COMMAND ECONOMY, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2024. [Accessed: February 27, 2024].


Check Out These Related Terms...

     | pure market economy | command economy | capitalism | socialism | communism | market socialism | market-oriented economy |


Or For A Little Background...

     | mixed economy | economic system | public sector | central planning |


And For Further Study...

     | three questions of allocation | distribution standards | government functions | property rights | political views | production possibilities |


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