Please enable JavaScript.
Coggle requires JavaScript to display documents.
Unit 5–The Aggregate Expenditures Model (Closed Economy) - Coggle Diagram
Unit 5–The Aggregate Expenditures Model (Closed Economy)
Assumptions and Simplifications
Use the Keynesian aggregate expenditures model.
Prices are fixed.
GDP=DI.
Begin with private, closed economy.
Consumption spending.
Investment spending.
Consumption and Investment
Equilibrium GDP
Equilibrium GDP Graphically
Other Features of Equilibrium GDP
Saving equals planned investment.
Saving is a leakage of spending.
Investment is an injection of spending.
No unplanned changes in inventories.
Firms do not change production.
