Autonomous expenditure refers to the part of aggregate spending that does not depend on the level of income in an economy. It is the minimum level of spending that would occur even if income were zero. This concept is particularly important in macroeconomics and is associated with the Keynesian economic theory.

The components of autonomous expenditure include spending that is considered essential and not directly tied to changes in income. In the context of Keynesian economics, the aggregate expenditure (AE) is often expressed as the sum of autonomous expenditure and induced expenditure. The formula for aggregate expenditure is:

\[ AE = C + I + G + (X – M) \]

– \( C \) is consumption,
– \( I \) is investment,
– \( G \) is government spending,
– \( X \) is exports, and
– \( M \) is imports.

Autonomous expenditure (\( A \)) is often broken down further:

\[ A = C_{\text{autonomous}} + I_{\text{autonomous}} + G_{\text{autonomous}} + (X_{\text{autonomous}} – M_{\text{autonomous}}) \]

– \( C_{\text{autonomous}} \) is autonomous consumption,
– \( I_{\text{autonomous}} \) is autonomous investment,
– \( G_{\text{autonomous}} \) is autonomous government spending, and
– \( (X_{\text{autonomous}} – M_{\text{autonomous}}) \) is autonomous net exports.

Examples of autonomous expenditure components include government spending that is not tied to the current level of income, fixed investment that does not depend on the level of income, and consumption spending that individuals or households undertake even when they have no income (such as spending from savings or through credit).

Changes in autonomous expenditure can have significant effects on the overall level of economic activity. For example, an increase in government spending that is not linked to changes in income can boost overall demand in the economy, potentially leading to increased production and employment. Conversely, a decrease in autonomous expenditure might contribute to a decrease in overall economic activity.

Understanding autonomous expenditure is a key aspect of analyzing economic fluctuations and formulating fiscal and monetary policies to stabilize the economy, as outlined in Keynesian economic models.