Aggregate Expenditure Calculator

Analyze economic activity by calculating aggregate expenditure (AE) and equilibrium GDP with this interactive tool

Consumption (C)

$
%

Investment (I)

$

Government Spending (G)

$

Net Exports (NX)

$
$
From $
To $
Step $

Your AE Results

Consumption Function
C = a + MPC×Y
Multiplier Effect
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Equilibrium GDP
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Enter your values to see the economic analysis.

Detailed Data Table

GDP (Y) Consumption (C) Investment (I) Gov't (G) Net Exports (NX) Aggregate Expenditure (AE) Status
Enter values and click calculate to generate data

📈 Key Economic Concepts

💰

Aggregate Expenditure

AE = C + I + G + NX. The total spending in an economy on final goods and services.

📊

Marginal Propensity

MPC is the fraction of extra income that households consume rather than save (0 ≤ MPC ≤ 1).

✖️

Multiplier Effect

1/(1-MPC). Shows how initial spending leads to larger total increase in GDP.

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Equilibrium GDP

Where AE = GDP (Y). The economy is balanced with no tendency to expand or contract.

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Recessionary Gap

When AE < Y at full employment GDP, indicating insufficient demand in the economy.

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Inflationary Gap

When AE > Y at full employment GDP, indicating excess demand causing inflation.

🏛️ Policy Implications

Fiscal Policy Tools

  • Expansionary: Increase G or decrease taxes to stimulate AE during recession
  • Contractionary: Decrease G or increase taxes to reduce inflationary pressures
  • Multiplier Effect: Fiscal changes have amplified impact based on MPC

Monetary Policy Tools

  • Lower Interest Rates: Stimulates I component of AE by making borrowing cheaper
  • Quantitative Easing: Increases money supply to boost spending
  • Credit Controls: Influence consumption patterns and investment decisions

Trade Policy Tools

  • Tariffs/Quotas: Affect NX by making imports more expensive
  • Exchange Rates: Currency devaluation can boost exports
  • Trade Agreements: Open new markets for exports or increase import competition
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Note: This calculator provides an economic model based on Keynesian aggregate expenditure theory. Real-world economic conditions may vary due to factors not accounted for in this simplified model.