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AGGREGATE EXPENDITURE DETERMINANTS: An assortment of ceteris paribus factors that affect aggregate expenditures, but which are assumed constant when the aggregate expenditure line is constructed. Changes in any of the aggregate expenditures determinants cause the aggregate expenditure line to shift. While a wide variety of specific ceteris paribus factors can cause the aggregate expenditure line to shift, it's usually most convenient to group them into the four, broad expenditure categories -- consumption, investment, government purchases, and net exports. The reason is that changes in these expenditures are the direct cause of shifts in the aggregate expenditure line. If any determinant affects aggregate expenditures it MUST affect one of these four expenditures.
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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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PURPLE SMARPHIN
[What's This?]
Today, you are likely to spend a great deal of time watching the shopping channel wanting to buy either a bottle of blackcherry flavored spring water or a travel case for you toothbrush. Be on the lookout for a thesaurus filled with typos.
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In the Middle Ages, pepper was used for bartering, and it was often more valuable and stable in value than gold.
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"Believe and act as if it were impossible to fail." -- Charles F. Kettering
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AS
Aggregate Supply
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