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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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CHANGE IN AGGREGATE EXPENDITURES

The movement along an aggregate demand curve caused by a change in the price level. A change in aggregate expenditures is ONLY caused by a change in the price level. This is one of two changes related to aggregate demand. The other is a change in aggregate demand. A change in aggregate expenditures is comparable to a change in quantity demanded.

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