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Augmented Saving
An alternative way of determining equilibrium GDP is to find the level of income where the sum of desired injections equals the sum of desired leakages. Desired injections include Investment (I), Government Spending (G), and Exports (X). Leakages include Saving (S), Taxes (T), and Imports (M). Thus, the condition for equilibrium is: S + T + M = I + G + XSubtracting G and M from both side of the above equation gives S + (T - G) = I + (X - M)This equation can be interpreted as a generalization of the condition that saving equals investment, since it says that national saving equals asset formation.What happens when desired national assets formation exceeds desired national saving? Firms will respond to the imbalance by producing more, moving the economy towards equilibrium.What happens when desired national saving is more than desired national asset formation?Firms will cut back on output in order to avoid accumulating excess inventories, and the economy will move towards equilibrium.
Suppose a major brokerage firm advised its clients to buy cigarette stocks under the assumption that, if consumer incomes rise by 50% as expected over the next decade, cigarette sa
Q. Evaluate Nominal wages? Nominal wages W = (W/P).P The nominal wage is equal to the real wage times the price level. Because the real wag
circular flow of national income?
define business cycle
A company is researching the effectiveness of a new web site design to decrease the time to access a website. Five web site users were randomly selected and their times (in seconds
#types of economic systems
subjective questions on national income determination
The study of the overall aspects and workings of a national economy is like as income, output, and the interrelationship between diverse economic sectors. It is the study of all as
Recently, a bank was trying to decide what fee to charge for "expedited payments" - payments that the bank would transmit extra-speedily to enable customers to avoid late fees on c
Following on papers by Pacala and Socolow,1 The Carbon Mitigation Initiative at Princeton University, http://cmi.princeton.edu/ has summarized carbon stabilization strategies at
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