The desired aggregate spending function explains the relationship between desired real spending and the real gross domestic product (GDP). The aggregate spending nations’ output comprises consumption expenditure of the households, investment expenditure, government expenditure and net export expenditure. But , in a two sector, economy aggregate spending comprises private consumption expending investment expenditure. Symbolically,

              AE = C + I
Where  AE = Aggregate expenditure,
             C  = Private consumption expenditure, and
              I  = Investment expenditure.

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