The Syllabus. §

• The components of aggregate expenditure (AE).

  • Consumption.
  • Investment.
  • Government spending.
  • Net exports.

• Factors affecting each of the components of aggregate expenditure.

• The relationship between the consumption function, the marginal propensity to consume and the marginal propensity to save.

• The concept of macroeconomic equilibrium.

• Demonstrate the impact of changes in aggregate expenditure on the equilibrium level of income/output using the AE model.

• The impact of changes in each of the components of aggregate expenditure i.e. the multiplier process using the AE model.