Answered: Consider the national income model:

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Economics

Consider the national income model:

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter17: Income, Poverty, And Health Care

Section: Chapter Questions

Problem 1P

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Question

Consider the national income model:
Y = C + I0 + G0 + (X0 − M) … … . . … . (1)
C = a + byd, (a > 0,0 < b < 1) … … . (2)
Yd = Y − T … … … … … … … … … … … . . . (3)
T = T0 + ty … … … … … … … … … … … . . (4)
M = M0 + my … … … … … … … … … … . . (5)
Where: (T) = taxes, (t) = income tax rate
Identify:
4/ Behavioral equations.
5/ Definitional equation.
6/ Constants., give the Economic meaning of them.
7/ Coefficients. give the Economic meaning of them.

Definition Definition Monetary value of all goods and services produced in an economy during a financial year. National income also refers to the total income earned by the factors of production during a financial year.

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