Week 6 Flashcards
1
Q
What does aggregate expenditure describe?
A
everyone’s spending plans
2
Q
What is the equation for aggregate expenditure?
A
AE = C + I + G + NX
Aggregate exp = consumption + planned investment + gov purchases + net exports
3
Q
What is potential output?
A
the level of GDP at which all resources are fully employed
4
Q
What is the output gap?
A
the % difference between actual output and potential
5
Q
A
