Principles of Macroeconomics / Unit 9 MAC 0819 short lesson, about 20 seconds
Stacking the AE Line
Captions available
The idea
Aggregate expenditure sums consumption, investment, government purchases and exports, minus imports. The intercept comes from everything autonomous; the slope from the propensity to consume, the tax rate and the propensity to import.
In practice
Raising any of those three flattens the line, because less of each extra dollar returns as spending.
Where people slip
Imports come out of after-tax income throughout this course, matching consumption.
Your place on the trail
Every lesson rests on earlier ones and opens later ones. Tap any to jump.
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