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Why GDP equals aggregate expenditure and aggregate income?
GDP would be the amount of gross income a person or company receives. This would be the amount of income minus the amount of expenditure on things like bills.
What is Simple theory of Income Determination?
Total income depends on total employment which depends on effective demand which in turn depends on consumption expenditure and investment expenditure. Consumption depends on income and propensity to consume. Investment depends upon the marginal efficiency of capital and the rate of interest. J. M. Keynes made it clear that the level of employment depends on aggregate demand and aggregate supply. The equilibrium level of income or output depends on the relationship between the aggregate demand curve and aggregate supply curve. As Keynes was interested in the immediate problems of the short run, he ignored the aggregate supply function and focused on aggregate demand. And he attributed unemployment to deficiency in aggregate demand.
What do you mean by income over expenditure or expenditure over income?
income over expenditure is profitexpenditure over income is loss
What does the income-expenditure identity say about the relationship between income and expenditure?
The income-expenditure identity states that in an economy, total income equals total expenditure. This means that the amount of money earned by individuals and businesses is equal to the amount of money spent on goods and services.
What is the concept of Multiplier?
The concept of Multiplier highlights the effects of initial investment upon national income through changes in consumption expenditure.
