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aggregate expenditure models - Coggle Diagram
aggregate expenditure models
gvt is ignored
private sector
businesses
households
savings is personal
GDP = DI
investment demand curve
relationship between interest rates and investment
interest ratesdecrease; borrowig is cheaper; demand for investment increases
negative relationship
investment schedule
relationship between investment and real GDP
if investment increases over time, GDP is expected to increase
equilibrium GDP
equilibrium GDP is where aggregate expenditure schedule intersects the 45 degree line
savings = planned investment
leakage of spending
consuption< GDP
investment is assumed to be the same at each lvl of GDP, vertical distance between (c) and (c+Ig) dont change
unplanned inventories
business expenditure
aggregate spending < equilibrium GDP
(c+Ig) is determined by adding (Ig) to the upsloping consumption schedule
aggregate expenditure > GDP = less inv. investment
negative amount
