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SLOPE, AGGREGATE EXPENDITURES LINE: The positive slope of the aggregate expenditures line is the sum of the marginal propensity to consume (MPC), marginal propensity to invest (MPI), and marginal propensity for government purchases (MPG), less the marginal propensity to import (MPM). This slope is greater than zero but less than one, reflecting induced expenditures by the four macroeconomic sectors (household, business, government, and foreign). The slope of the aggregate expenditures line determines the magnitude of the multiplier process.
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INTEREST-RATE EFFECT A change in aggregate expenditures on real production, especially those made by the household and business sectors, that results because a change in the price level alters the interest rate which then affects the cost of borrowing. This is one of three effects underlying the negative slope of the aggregate demand curve associated with a movement along the aggregate demand curve and a change in aggregate expenditures. The other two are real-balance effect and net-export effect.
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BLACK DISMALAPOD
[What's This?]
Today, you are likely to spend a great deal of time browsing about a thrift store trying to buy either a box of multi-colored, plastic paper clips or several orange mixing bowls. Be on the lookout for the last item on a shelf.
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This isn't me! What am I?
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Francis Bacon (1561-1626), a champion of the scientific method, died when he caught a severe cold while attempting to preserve a chicken by filling it with snow.
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"It is not because things are difficult that we do not dare; it is because we do not dare that they are difficult. " -- Seneca, statesman, dramatist, philosopher
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MU
Marginal Utility
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