Look again at Solved Problem 29.3, where the saving and investment equation S = I + NX
Question:
Look again at Solved Problem 29.3, where the saving and investment equation S = I + NX is derived. In deriving this equation, we assumed that national income was equal to Y. But Y only includes income earned by households. In the modern U.S. economy, households receive substantial transfer payments-such as Social Security payments and unemployment insurance payments-from the government. Suppose that we define national income as being equal to Y + TR, where TR equals government transfer payments, and we also define government spending as being equal to G + TR. Show that after making these adjustments, we
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