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Autonomous Expenditure, Macroeconomics Video Lecture | Macro Economics - B Com
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FAQs on Autonomous Expenditure, Macroeconomics Video Lecture - Macro Economics - B Com
| 1. What is autonomous expenditure in macroeconomics? |  |
Autonomous expenditure refers to the level of spending in an economy that is not influenced by changes in income or output. It includes government spending, investment by businesses, and exports. These types of expenditures are considered autonomous because they are determined by factors other than the level of income in the economy.
| 2. How does autonomous expenditure affect the overall economy? | |
Autonomous expenditure plays a crucial role in determining the level of aggregate demand and influencing economic growth. An increase in autonomous expenditure leads to a multiplier effect, where the initial increase in spending stimulates further economic activity and income. Conversely, a decrease in autonomous expenditure can result in a decrease in overall economic activity and potentially lead to a recession.
| 3. What factors can influence autonomous expenditure? | |
Several factors can influence autonomous expenditure. Government policies, such as changes in taxation or spending, can directly impact autonomous expenditure. Business expectations about future profitability and economic conditions also play a significant role in determining investment levels. Additionally, changes in global demand and exchange rates affect the level of exports, which contribute to autonomous expenditure.
| 4. How does autonomous expenditure differ from induced expenditure? | |
Autonomous expenditure and induced expenditure are both components of aggregate expenditure but differ in their relationship to income. Autonomous expenditure is independent of income and remains constant regardless of changes in income levels. In contrast, induced expenditure varies with changes in income. As income increases, individuals and businesses tend to spend more, leading to an increase in induced expenditure.
| 5. Can autonomous expenditure be negative? | |
Yes, autonomous expenditure can be negative. Negative autonomous expenditure occurs when government spending, investment, or exports are lower than usual. This can happen during periods of economic downturn or when there are significant decreases in government spending or business investment. Negative autonomous expenditure can have a contractionary effect on the overall economy, potentially leading to a decrease in output and employment.
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Nov 16, 2024 Last updated |
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