II. Real GDP with a Fixed Price Level

Real GDP (Y)	Consumption expenditure (C)	Investment (I)	Government expenditure (G)	Exports (X)	Imports (M)	Aggregate planned expenditure (AE=C+I+G+X-M)
(trillions of 2000 dollars)
11.0	7.2	2.0	2.0	1.0	0.8	11.4
12.0	8.1	2.0	2.0	1.0	0.9	12.2
13.0	9.0	2.0	2.0	1.0	1.0	13.0
14.0	9.9	2.0	2.0	1.0	1.1	14.8

Aggregate Planned Expenditure and Real GDP

• Aggregate planned expenditure, AE, is the sum of planned consumption expenditure plus planned investment plus planned government expenditure on goods and services plus planned exports minus planned imports. The above table shows the calculation of an aggregate planned expenditure schedule. The figure shows the resulting AE curve.
• Consumption expenditure minus imports vary with real GDP and are induced expenditure. The sum of investment, government expenditures, and exports do not vary with real GDP and are autonomous expenditure. Consumption expenditure and imports also have an autonomous component.
• Actual expenditure can differ from planned expenditure because firms do not always sell what they plan to, in which case they have unplanned inventory investment. For instance, a car that is manufactured but not immediately sold is part of that firm’s actual inventory investment regardless of whether the firm planned to add it to inventory or not.

Equilibrium Expenditure and Convergence to the Equilibrium

• Equilibrium expenditure is the level of aggregate expenditure that occurs when aggregate planned expenditure equals real GDP. In the figure, equilibrium expenditure is $12 trillion.
• If aggregate expenditure does not equal its equilibrium, forces lead to convergence. For example, if real GDP exceeds aggregate planned expenditure, firms find their inventories are increasing more than planned. The unplanned inventory accumulation leads firms to cut production so that real GDP decreases, which decreases aggregate planned expenditures. Real GDP still exceeds aggregate planned expenditure, but by less than before. The process continues until real GDP equals aggregate planned expenditure so that there is no unplanned inventory accumulation.

Дата добавления: 2015-11-04