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After reading this chapter, you should be able to:

1. Illustrate how economists combine consumption and investment to depict an aggregate expenditures schedule for a private closed economy.
2. Discuss the three characteristics of the equilibrium level of real GDP in a private closed economy: aggregate expenditures = output; saving = investment; and no unplanned changes in inventories.
3. Analyze how changes in equilibrium real GDP can occur in the aggregate expenditures model and describe how those changes relate to the multiplier.
4. Explain how economists integrate the international sector (exports and imports) and the public sector (government expenditures and taxes) into the aggregate expenditures model.
5. Identify and describe the nature and causes of "recessionary expenditure gaps" and "inflationary expenditure gaps."