Induced Spending

Question

How do I find the induced spending by looking at the aggregate expenditure graph?

Answer 1

Induced Spending is the part of total spending that changes as real GDP changes, meaning that on a graph that is represented by the portion of the AE curve's vertical height that is above the vertical intercept

That means that in order to find it you can take

Induced Spending = Total Aggregate Expenditure - Autonomous Spending

I hope that helps get you moving in a good direction! Feel free to reach out if you have any additional questions beyond that :)

Answer 2