AD = C + I + G + (X – M)

So by the expenditure model our National Income is equal to our collective spending (Aggregate Demand). Let’s see what influences each element of this important equation.

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SOLVED: HOMEWORK Consider the following macroeconomic system where C, I, G, X, M represent respectively, consumption expenditures, investment expenditures, government expenditures, exports, and imports. Yd and Y denote the disposable income and

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