Learning Objectives

  1. Describe the simple aggregate expenditure model.
  2. Explain how to find equilibrium in the aggregate expenditure model.
  3. Explain the impact of adding investment, government purchases, and net exports to the aggregate expenditure model and explain how the aggregate expenditure model helps to explain the process of the business cycle.
  4. Explain how the multiplier affects aggregate expenditures.
  5. Describe how to move from the aggregate expenditure model to aggregate demand.