Question

19. Given the following models:
Y=
1
1−C
(𝐶0−𝐶𝑇+𝐼
𝑃+𝐺+𝑁𝑋) and 𝜕𝑌
𝜕𝐺
a. What does 1−C standing for ?

Answer 1

1-C stands for the change in consumption. It represents the difference between the initial level of consumption (C0) and the final level of consumption (CT) when there is a change in income (I), prices (P), government spending (G), and net exports (NX).