ECON 1002 (1 Viewer)
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OMG.... nevermind. Atta has written it Y* = 1/(1-b)[ca+1] which looks like 1 divided by the denominator (1-b)[ca+1]....... but it is in fact [1/(1-b)] x [Ca + 1].... ffsSarah168 said:in atta style response...just put a 1 in front of Ca + I and you will get your answer
I'm still trying to work out the puzzle as well. Rorix previously said that the puzzle could be someone who hasnt done economics would do. By comparing the the two different consumption functions, the difference in GDP is 625 and national saving is 50. That looks like a puzzle to me....lol
The puzzle from what I gathered is that consumption decreases therefore savings should increase since Y = C + S, but since it's autonomous consumption only and every thing else begin equal the equilibrum/income and therefore national savings decreases ??
perhaps this puzzle has something to do with keynes' 'paradox of thrift'? which says that because people want to spend and less and save more, less is being produced, and there is less income...
though this hasn't been covered in lectures...
though this hasn't been covered in lectures...
I agree...in fact, it should be possible to prove the paradox of thrift through the multiplier
ok, so the decline in auto consumption should have decreased gdp by (1/1-0.8) * 75
in turn, this would reduce saving as well: by marginal propensity to save * [(1/1-08) * 75]
agreed??
ok, so the decline in auto consumption should have decreased gdp by (1/1-0.8) * 75
in turn, this would reduce saving as well: by marginal propensity to save * [(1/1-08) * 75]
agreed??
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I considered this, except for the fact that a multiplier of 5 should decrease GDP by 375 and this doesn't match the figures in the qs so I left it out.
Oh and I think the multiplier doesn't work that way, it is defined as 1/mpc or 1/(1-mps) it can't double dip.
Oh and I think the multiplier doesn't work that way, it is defined as 1/mpc or 1/(1-mps) it can't double dip.
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I read that more as saying if you borrow ideas to supplement whats already been done in lectures that help us answer the questions.
Perhaps I should rephrase - i doubt he'd put something as one answer, that so few would actually come across even with strenuous research in books/net.
Perhaps I should rephrase - i doubt he'd put something as one answer, that so few would actually come across even with strenuous research in books/net.
no idea what you mean by thatjpr333 said:
the fact that it refers to borrowed ideas means research should be allowable. but what i thinking of how to answer this question was to derive the paradox of thrift through the equation. unfortunately i can't figure out how to do that.011 said: