Autonomous Expenditure

What is an 'Autonomous Expenditure'

An autonomous expenditure is a macroeconomic term used to describe the components of an economy's aggregate expenditure that are not impacted by that same economy's real level of income. This type of spending is considered automatic and necessary, whether occurring at the government level or the individual level. Classical economic theory states that a rise in autonomous expenditures will create at least an equivalent rise in aggregate output (such as GDP), if not a greater rise.

BREAKING DOWN 'Autonomous Expenditure'

Some of the spending classes that are considered autonomous of income levels (which can counted as either individual income or taxation income) are government expenditures, investments, exports and basic living expenses (such as food and shelter).

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  3. How do you calculate GDP with the expenditures approach?

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