9. Given the following models:

Question

Y=
1
1−C
(𝐶0−𝐶𝑇+𝐼
𝑃+𝐺+𝑁𝑋) and 𝜕𝑌
𝜕𝐺
=
1
1−C
a. What does 1−C standing for ?

Answer 1

In this context, 1-C stands for the inverse of the consumption ratio. It represents the fraction of income that is not consumed, or in other words, the fraction of income that is saved or invested.