ECON 1002 (1 Viewer)

[011]

oh yeh Y = f ( l, t, k) damnit, how can i forget that...

but then, if all labours who works in the economy is gettin an income of W, won't GDP be W L?

edit: i thnk atta said s th along the lines like " and the co ef" is actulaly real wages '"

or s th...

- technology is intangible
- machines cant get a wage

- can you enlighten me on the PUZZLE?

 

[xiao1985]

ohh the puzzle...

havn't done the q yet... but i supose u shud observe a decline in GDP... however, if pplz start to save, you would expect to see GDP to rise, as pplz start to accumulate waelth... on the contrary, u see a fall in gdp... reason shud be that gdp is positively related to consumptio... when consumption declines, gdp declines...

also regarding nation saving... isn't that public saving add to private saving?!

 

[sarevok]

isnt the puzzle that the amount of saving and gdp has actually decreased? when in fact the income should just be going toward saving and then investment, so there should be no change in gdp. i'm guessing the fall in gdp/saving can be related to the consumption multiplier...

@ the two smart pplz who are having a debate on how to do q2a) **** i hate that q... ><
i got v = 1-b somehow at the end... where b is the MPC

ok firstly, does atta mean change in investment = v* [ change in Y]?!
i mean, u can't really have negative investment?!

ok i start with Y = C + S (assume no tax)
also C = Ca + bY

hence Y = Ca + bY + S
assume closed economy, hence S = I... so change in Y = (Ca + bY + I) - (Ca + bY' + I')
= b (change in Y) + (change in I)

sub into change in I = v ( change in Y)
change in I = b v(change in Y) + v(Change in I)
change in I = b Change in I + v Change in I

hence 1 - b = v

hahahha..okay, i have no idea what you did there. and seems a bit verbose, the word limit for entire question 2 is 250

 

[kow_dude]

ok firstly, does atta mean change in investment = v* [ change in Y]?!
i mean, u can't really have negative investment?!

ok i start with Y = C + S (assume no tax)
also C = Ca + bY

hence Y = Ca + bY + S
assume closed economy, hence S = I... so change in Y = (Ca + bY + I) - (Ca + bY' + I')
= b (change in Y) + (change in I)

sub into change in I = v ( change in Y)
change in I = b v(change in Y) + v(Change in I)
change in I = b Change in I + v Change in I

hence 1 - b = v

What's all that? Who says we need to derive 'v'? We're comparing and contrasting neoclassical and accelerator.

 

[ToO LaZy ^*]

national saving is private savings + government saving
yeah, wtf @ the maths bit.

 

[xiao1985]

@saverok: but multiplier is related to mpc only by the fomula 1/(1-b) right?! mpc has not changed... the automonous part did?!

oh wait... multiplier shud depend on apc not mpc...

@kow dude: "how is the accelerator coef related to real wages?" 2nd part of the q...

@too lazy: stop quick edit ur post lol u kill ur signiture lol

 

[011]

ohh the puzzle...

havn't done the q yet... but i supose u shud observe a decline in GDP... however, if pplz start to save, you would expect to see GDP to rise, as pplz start to accumulate waelth... on the contrary, u see a fall in gdp... reason shud be that gdp is positively related to consumptio... when consumption declines, gdp declines...

also regarding nation saving... isn't that public saving add to private saving?!

isnt the puzzle that the amount of saving and gdp has actually decreased? when in fact the income should just be going toward saving and then investment, so there should be no change in gdp. i'm guessing the fall in gdp/saving can be related to the consumption multiplier...



hahahha..okay, i have no idea what you did there. and seems a bit verbose, the word limit for entire question 2 is 250

Yes, indeed thats what i wanted to know. Is there meant to be, by a decrease in autonomous consumption (and thus saving), an increase in GDP since S = I? (but the economy isnt closed, and theres T, M, G, X to be taken into account)
I dont quite understand, sarevok, why you say GDP should remain constant. I agree that the puzzle essentially is that theres a fall in national saving and GDP, though.

@saverok: but multiplier is related to mpc only by the fomula 1/(1-b) right?! mpc has not changed... the automonous part did?!

oh wait... multiplier shud depend on apc not mpc...

And yes, how can this involve the multiplier if the multiplier is 1/(1-b), where b is as in bY (which is not affected at all by the change in consumption) - it is Ca, the autonomous bit, that is!

 

[xiao1985]

for a acc coef with real wage... i am suspecting atta only requre us to state positively or negatively or not related and then support our answers...

i think it's not quite possible to derive them mathematically...

 

[xiao1985]

@011: but Y* = 1/ (1-b) [ Ca + I ] ,... which means if Ca declines, Y* declines...

and btw, i think that's the puzzle lol

 

[sarevok]

ohhh you're right...i jsut said that off the top of my head without looking at the question, didnt realise only the autonomous part had chagned.

 

[011]

@011: but Y* = 1/ (1-b) [ Ca + I ] ,... which means if Ca declines, Y* declines...

and btw, i think that's the puzzle lol

So you say the puzzle is that, at first you'd expect GDP to increase if people consume less, because they will save and invest more (and GDP = C+I+G+NX). But infact what's happened is that GDP has decreased, because of the multiplier effect, and infact the equilibrium GDP follows your equation, so that a decrease in b would RAISE gdp as expected, but a decrease in Ca actually LOWERS GDP.

Is that it? Sounds good.
Any takers?

 

[llamalope]

OMG... so glad my mid semester was an essay

(stream 6)

 

[ToO LaZy ^*]

So you say the puzzle is that, at first you'd expect GDP to increase if people consume less, because they will save and invest more (and GDP = C+I+G+NX). But infact what's happened is that GDP has decreased, because of the multiplier effect, and infact the equilibrium GDP follows your equation, so that a decrease in b would RAISE gdp as expected, but a decrease in Ca actually LOWERS GDP.

Is that it? Sounds good.
Any takers?

*Ctrl C, Ctrl V* ...all good.

 

[xiao1985]

@brogan: ur eqn seems right... maybe pluggin in problem...
what's ur calculated y?

@too lazy: "ALL BORROWED IDEAS MUST BE PROPERLY REFERENCED" as per individual asgmt XD =p

 

[011]

*Ctrl C, Ctrl V* ...all good.

Hey! No copy/paste!
I dont even know if thats right, thats why i posted and said does it look right to others.

 

[kow_dude]

I dont even know most of the stuff 011 and sarevok was debating about!

 

[xiao1985]

@kow dude: same here... btw u from homebush!!! ^^

@011: hehe looks sophisticated... so should fool whoever marking the paper... =p
btw, nice dragon in ur sig... did u draw it?! =D

 

[ToO LaZy ^*]

@brogan: ur eqn seems right... maybe pluggin in problem...
what's ur calculated y?

@too lazy: "ALL BORROWED IDEAS MUST BE PROPERLY REFERENCED" as per individual asgmt XD =p

www.boredofstudies.org ECON1001 pg 5 by Professor 011

 

[kow_dude]

@kow dude: same here... btw u from homebush!!! ^^

YES..........!!

 

[xiao1985]

my calculated y is 24166

@brogan: hmmm bit too high there... most of us got s th like 24?? can't rmber exactly... scroll back to see...

@kow dude: lol i was too... =p until i defected... XD

@too lazy: hehe i thought u were serz lol...