What is the difference between planned expenditure and actual expenditure?

What is the difference between planned expenditure and actual expenditure?

The difference between planned and actual expenditure is unplanned inventory investment. When firms sell less of their product than planned, stocks of inventories rise. Because of this, actual expenditure can be above or below planned expenditure.

What is a planned expenditure?

Plan expenditure is that component of government expenses which helps increase the productive capacity in the economy. Unlike non-plan expenditure, which is mostly fixed and obligatory in nature, plan expenditure is part of Budget estimates determined after discussions with the ministries and stakeholders concerned.

What is a plan of income and expenditure?

An expenditure plan, also known as a spending plan, is a strategic tool that a small business can use to manage money. The expenditure plan helps in tracking the amount of income or revenue available, and in making decisions on how to use this income and also to save some.

What is the difference between AE and GDP?

In economics, aggregate expenditure is the current value (price) of all the finished goods and services in the economy. The equation for aggregate expenditure is AE = C+ I + G + NX. The GDP of an economy is calculated using the aggregate expenditure model.

What is the difference between planned and actual spend called?

Positive Variance: So for sales and profits, variance is actual results less planned results (subtract plan from actual). For costs and expenses, spending less than planned is good, so positive variance is when the actual amount is less than the planned amount.

What is the difference between planned and unplanned inventory investment?

Planned inventory refers to changes in stock or inventories which has occurred in a planned way. In this case inventory accumulation is equal to the expected accumulation therefore it is a planned inventory accumulation. Unplanned inventory refers to change in stock or inventories which has incurred unexpectedly.

What is planned and non planned expenditure?

Non-plan expenditure is what the government spends on the so-called non-productive areas, such as salaries, subsidies, loans and interest, while plan expenditure pertains to the money to be set aside for productive purposes, like various projects of ministries.

What is planned expenditure in macroeconomics?

According to the Keynesian model of macroeconomics, aggregate planned expenditure (PE) is determined as the sum of planned consumption expenditures (C), planned investment expenditures (I), planned government expenditures (G) and planned net exports (NX):

Why is it important to compare the planned income and expenditure against actual income and expenditure?

The primary purpose when monitoring expenditure against income is to ensure that expenditure does not exceed the available income. As when monitoring expenditure against budget, the first problem is how to identify which sources of funds are showing significant surpluses or deficits.

What is planned aggregate expenditure?

What is the relationship between aggregate planned expenditure and real GDP?

When real GDP decreases, aggregate planned expenditure decreases. But real GDP decreases by more than planned expenditure, so eventually the gap between planned expenditure and actual expenditure closes. When aggregate planned expenditure exceeds real GDP, firms increase production. Real GDP increases.

What is the difference between planned expenditures and actual expenditures?

A planned expenditure is money you intended or expected to spend. For instance, we expected to spend $10,000 on new equipment to improve our operations. Actual expenditures is how much you really spent. For example, we actually spent just $9000 for that equipment when we planned for $10,000. So we saved ourselves $1000!

What is the difference between planned investment and unplanned investment?

This type of investment is called unplanned investment. Unplanned investment takes place when unsold finished goods accumulate due to poor sales. Thus, actual investment of an economy is the total of planned investment and unplanned investment. Actual investment = Planned investment + Unplanned investment

What is income-expenditure equilibrium in macroeconomics?

Definition: The economy is in income–expenditure equilibriumwhenaggregate output, measured by real GDP, is equal to planned aggregatespending. Definition: Income–expenditure equilibrium GDPis the level of realGDP at which real GDP equals planned aggregate spending. A 45-degree line represents a set of income–expenditure equilibriumpoints.

How do you represent planned consumption expenditure as a function?

So, we can represent planned consumption expenditure as the following function: where CA represents the autonomous component of consumption (the portion of total consumption expenditure that would still occur if disposable income was $0).