AE and EO

• Aggregate Expenditure (AE)


  Consumption + Investment + Government spending

  
• In equilibrium, aggregate expenditure is equal to aggregate output

  
• Aggregate output


  Total quantity of goods and services produced in an economy in a given period
• Aggregate income


  Total income received by all factors of production in a given period
• Aggregate output (income) = Consumption + Investment + Government spending