Question
Y = Z = C + I + G.Let's call this the old equation. , the equation had morphed into the following form:Y = Z
Y = Z = C + I + G.Let's call this the old equation. , the equation had morphed into the following form:Y = Z = Co + C1 ( Y - T ) + I ( Y, r ) + G. Let's call this the new equation.
a.( 7 points )Discuss critically how thetwo equations are different.
b.( 8 points )How does the new equation show the connection between the Goods Market and the Financial Market?
Use graphs to explain your answers.
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Economics Today The Macro View
Authors: Roger LeRoy Miller
18th Edition
0133884872, 978-0133884876
