Macroeconomics, Economic theories, John Maynard Keynes

The current US government is facing many challenges owing to the slowdown of economy and the poor performance of many US institutions. In that context, the Keynesian Aggregate Expenditure Model is of apt relevance. Aggregate expenditure or aggregate demand is the total expenditure on the domestic goods and services. As per this model, the aggregate demand in an economy comprises of Consumption expenditure (C), Net exports (E), Investment expenditure (I) and Government Expenditure (G) (Pass Lowes 8). HenceSome aspects of the aggregate demand tend to be stable and alter at a slow pace at any time (Pass Lowes 8). Other aspects of aggregate demand like Investment expenditure tend to be volatile and change at a short notice, thereby influencing the level of economic activity in a country