Introductory Macroeconomics Chapter 1 Introduction

Involuntary unemployment refers to a situation when a person who is able and is willing to work does not get work at the going wage rate.

Marginal Propensity to Consume is the proportion of additional income that an individual consumes. MPC refers to the ratio of change in the consumption expenditure and change in the disposable income.

Flow is a quantity measured over a specified period of time. For example, the amount of interest received against bank deposits. Examples of flow are income, expenditure of money, capital formation, changes in the supply of money in a country and interest on capital

Aggregate demand means the total demand for goods and services in an economy during the year. Components of aggregate demand:
i. Private consumption expenditure (C) is the total expenditure of households on final goods and services to satisfy their wants. It includes autonomous consumption expenditure and induced consumption expenditure.
ii. Private investment expenditure (I) is ex-ante investment by private investors corresponding to different income levels in the economy. It includes autonomous investment expenditure and induced investment expenditure.
iii. Government expenditure (G) is the planned expenditure by the government on consumption and investment expenditure for the welfare of the economy. iv. Net export (X–M) is the difference between the goods and services produced domestically by the rest of the world and abroad by the residents of a country.