1 answer

Aggregate expenditure is the total amount of spending in the economy that determines the level of...

Question:

Aggregate expenditure is the total amount of spending in the economy that determines the level of the GDP. Components of aggregate expenditure are autonomous expenditure, planned private investments, government expenditure, and net exports. When autonomous expenditure increases or decreases, it has a multiplied effect on the GDP.

Referring to the 10-year historical period that you chose for your final project, discuss an example of a change in autonomous spending. Research a government policy implemented during that time and discuss the multiplier effect it had on the economy.

I have chosen 2000-2010 in the US.

**This is not a research paper - it's just a quick brief for a discussion board**


Answers

Autonomous spending occurs when spending is automatic and does not depend on the level of income. People spend on necessary items which are required for day to day functioning. During the recession, autonomous spending reduced as consumers started saving that money instead of spending it.

Government initiated printing more money and spending through fiscal stimulus measures to increase the circulation of money and creating jobs in the economy. This led to increase in investments and expansion in growth. Factory production and several sectors started growing because of the multiplier effect in the economy.

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