Aggregate Expenditure Definition

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