# 11.3 The expenditure-output (or keynesian cross) model  (Page 6/41)

 Page 6 / 41

## Building the combined aggregate expenditure function

All the components of aggregate demand—consumption, investment, government spending, and the trade balance—are now in place to build the Keynesian cross diagram. [link] builds up an aggregate expenditure function, based on the numerical illustrations of C, I, G, X, and M that have been used throughout this text. The first three columns in [link] are lifted from the earlier [link] , which showed how to bring taxes into the consumption function. The first column is real GDP or national income, which is what appears on the horizontal axis of the income-expenditure diagram. The second column calculates after-tax income, based on the assumption, in this case, that 30% of real GDP is collected in taxes. The third column is based on an MPC of 0.8, so that as after-tax income rises by \$700 from one row to the next, consumption rises by \$560 (700 × 0.8) from one row to the next. Investment, government spending, and exports do not change with the level of current national income. In the previous discussion, investment was \$500, government spending was \$1,300, and exports were \$840, for a total of \$2,640. This total is shown in the fourth column. Imports are 0.1 of real GDP in this example, and the level of imports is calculated in the fifth column. The final column, aggregate expenditures, sums up C + I + G + X – M. This aggregate expenditure line is illustrated in [link] .

National income-aggregate expenditure equilibrium
National Income After-Tax Income Consumption Government Spending + Investment + Exports Imports Aggregate Expenditure
\$3,000 \$2,100 \$2,280 \$2,640 \$300 \$4,620
\$4,000 \$2,800 \$2,840 \$2,640 \$400 \$5,080
\$5,000 \$3,500 \$3,400 \$2,640 \$500 \$5,540
\$6,000 \$4,200 \$3,960 \$2,640 \$600 \$6,000
\$7,000 \$4,900 \$4,520 \$2,640 \$700 \$6,460
\$8,000 \$5,600 \$5,080 \$2,640 \$800 \$6,920
\$9,000 \$6,300 \$5,640 \$2,640 \$900 \$7,380

The aggregate expenditure function is formed by stacking on top of each other the consumption function (after taxes), the investment function, the government spending function, the export function, and the import function. The point at which the aggregate expenditure function intersects the vertical axis will be determined by the levels of investment, government, and export expenditures—which do not vary with national income. The upward slope of the aggregate expenditure function will be determined by the marginal propensity to save, the tax rate, and the marginal propensity to import. A higher marginal propensity to save, a higher tax rate, and a higher marginal propensity to import will all make the slope of the aggregate expenditure function flatter—because out of any extra income, more is going to savings or taxes or imports and less to spending on domestic goods and services.

what does nano mean?
nano basically means 10^(-9). nanometer is a unit to measure length.
Bharti
do you think it's worthwhile in the long term to study the effects and possibilities of nanotechnology on viral treatment?
absolutely yes
Daniel
how to know photocatalytic properties of tio2 nanoparticles...what to do now
it is a goid question and i want to know the answer as well
Maciej
Abigail
for teaching engĺish at school how nano technology help us
Anassong
Do somebody tell me a best nano engineering book for beginners?
what is fullerene does it is used to make bukky balls
are you nano engineer ?
s.
fullerene is a bucky ball aka Carbon 60 molecule. It was name by the architect Fuller. He design the geodesic dome. it resembles a soccer ball.
Tarell
what is the actual application of fullerenes nowadays?
Damian
That is a great question Damian. best way to answer that question is to Google it. there are hundreds of applications for buck minister fullerenes, from medical to aerospace. you can also find plenty of research papers that will give you great detail on the potential applications of fullerenes.
Tarell
what is the Synthesis, properties,and applications of carbon nano chemistry
Mostly, they use nano carbon for electronics and for materials to be strengthened.
Virgil
is Bucky paper clear?
CYNTHIA
so some one know about replacing silicon atom with phosphorous in semiconductors device?
Yeah, it is a pain to say the least. You basically have to heat the substarte up to around 1000 degrees celcius then pass phosphene gas over top of it, which is explosive and toxic by the way, under very low pressure.
Harper
Do you know which machine is used to that process?
s.
how to fabricate graphene ink ?
for screen printed electrodes ?
SUYASH
What is lattice structure?
of graphene you mean?
Ebrahim
or in general
Ebrahim
in general
s.
Graphene has a hexagonal structure
tahir
On having this app for quite a bit time, Haven't realised there's a chat room in it.
Cied
what is biological synthesis of nanoparticles
what's the easiest and fastest way to the synthesize AgNP?
China
Cied
types of nano material
I start with an easy one. carbon nanotubes woven into a long filament like a string
Porter
many many of nanotubes
Porter
what is the k.e before it land
Yasmin
what is the function of carbon nanotubes?
Cesar
I'm interested in nanotube
Uday
what is nanomaterials​ and their applications of sensors.
what is nano technology
what is system testing?
preparation of nanomaterial
how to synthesize TiO2 nanoparticles by chemical methods
Zubear
what's the program
Jordan
?
Jordan
what chemical
Jordan
how did you get the value of 2000N.What calculations are needed to arrive at it
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Equilibrium price is a stable price and it must stay.discuss
Card 14 / 21: What are the similarities between a consumer’s budget constraint and society’s production possibilities frontier, not just graphically but analytically?