Share This Article:

Economic Definition of aggregate expenditure equation. Defined.

Offline Version: PDF

Term aggregate expenditure equation Definition: An equation indicating that aggregate expenditures (AE) are the sum of consumption expenditures (C), investment expenditures (I), government purchases (G), and net exports (X-M), stated as: AE = C + I + G + (X-M). This equation surfaces in the Keynesian economic income-expenditure model in the form of the aggregate expenditures line. However, it's also central throughout the study of macroeconomics, including aggregate demand and the measurement of gross domestic product.


« aggregate expenditure determinants | aggregate expenditure line »


Alphabetical Reference to Over 2,000 Economic Terms