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Understanding Aggregate Expenditure Model in Macroeconomics

Aggregate expenditure is the total value of finished goods and services in an economy, determined by consumption, planned investment, government spending, and net exports. Discrepancies between actual and planned investment can lead to changes in inventories. Equilibrium is achieved when Aggregate Expenditure equals GDP. Components of Aggregate Expenditure include consumption, planned investment, government purchases, and net exports. The relationship between income and consumption, as well as factors influencing planned investment, are crucial in understanding macroeconomic equilibrium.

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Understanding Aggregate Expenditure Model in Macroeconomics

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