Figure 1: The aggregate expenditure modelThe aggregate expenditure model, Figure 1, focuses on the short-term relationship between total expenditure and gross domestic product (GDP) real, assuming that the price level is constant. Aggregate spending is the sum of consumption, investment, public purchases and net exports. The equilibrium level of GDP, E, exists when total output measured by GDP, Y0, and aggregate expenditures, AE0, are equal. In Figure 1, an increase in overall spending is illustrated by the upward movement of the overall spending line, AE0 to AE1. Companies that take advantage of the low interest rates offered by the RBA and the optimistic view of future profits can bring about this change. Increasing the aggregate expenditure line will also shift the equilibrium level of GDP from point E to point A and increase production from Y0 to point A.