Definition: It is the total amount of desired spending by consumers, governments, private investors and foreign buyers (net of spending on imports) at each level of real national income (GDP) in a given period.
AE = C + I + G + (X-M)
AE = Aggregate expenditure
C = Consumers’ expenditures on goods and services.
I = Investment spending by companies on capital goods
G = Government expenditures on publicly provided goods and services
X = Exports of goods and services
M = Imports of goods and services