# Saving and investment.

• July 22nd 2009, 09:35 PM
Lucy1
Saving and investment.
Ok so this is the equation and how it is rearranged

$I = S + ( T - G )$

$=[-C_0 + ( 1 - C ) ( Y - T ) ] + T - G$

$Y = \frac {1}{1-C_1} ( C_0 + I + G - C_1T)$

Ok so I am confused about why this occurs $C_1T$

Why multiply the marginal propensity to consume by tax? Can some one explain to me how these steps are thought out , my equation rearranging is not the sharpest.
• July 23rd 2009, 08:51 AM
Wilmer
Quote:

Originally Posted by Lucy1
$=[-C_0 + ( 1 - C ) ( Y - T ) ] + T - G$
$Y = \frac {1}{1-C_1} ( C_0 + I + G - C_1T)$

How are we to know what you're talking about?

Please post the original problem IN FULL.

And WHY does the C mysteriously become C1?
• July 23rd 2009, 11:03 AM
Lucy1
Have you ever studied economics?

Co is autonomous consumption. C1 is the marginal propensity to consume. That is the full equation. also savings (s) equals (Y-T)- C.

But i assumed if you were answering this you would know economics.

Can anyone out there help?
• July 23rd 2009, 01:27 PM
Wilmer
Quote:

Originally Posted by Lucy1
$I = S + ( T - G )$

$=[-C_0 + ( 1 - C ) ( Y - T ) ] + T - G$

$Y = \frac {1}{1-C_1} ( C_0 + I + G - C_1T)$

Equations get solved the SAME WAY regardless of where they come from.

WHAT are the above: 2 different equations ?

Or is the last one an attempt to solve the other in terms of Y? If so,
then it is NOT POSSIBLE to go from C to C1 in the solving process.

Let's wait to see what somebody else thinks/answers.
I'm not interested in a back and forth argument.
• July 23rd 2009, 09:12 PM
TKHunny
Quote:

Originally Posted by Lucy1
Have you ever studied economics?

But i assumed if you were answering this you would know economics.

Can anyone out there help?

Lucy1, Lucy1. You are not demonstrating a good, sociable attitude. There are many who can help. Wilmer is one of them. However, you must listen.

Important Lesson: Mathematical notation carries a surprising result. It enables those familiar with it to discover things that were not discovered earlier. In this case, we have a nice equation. We manipulate it a bit, using standard rules of algebra, and something surprising pops out. We LEARN something.

Where does (C1)T come from?

1) We need a definition of C1. It is NOT inherent in the equation and must be explained. Otherwise, (C1)T comes from the dust and it will forever remain a mystery.

2) Once we have a good definition, we can let the notation discover new things for us. Solving for Y is a useful exercise. When doing so, an interesting result occurs. The previously undiscovered (C1)T emerges. Now we can ponder its meaning.

3) There isn't a (C1)T TERM. It's $\frac{C_{1}T}{1-C_{1}}$. This may cause one to reconsider the question in the first place.

4) Specific applications often carry specific approximations. This requires the student to provide the proof of certain concepts. Approximations normally are simplifying assumptions that lead to more practical results.

5) Specific texts and professors sometimes use esoteric language and terms. Not everyone speaks English, for example. You should feel a responsibility to communicate clearly, rather than insisting that others understand you.

What say you? Have you yet learned anything?
• July 23rd 2009, 09:22 PM
VonNemo19
Quote:

Originally Posted by Lucy1
Have you ever studied economics?

Have you ever studied mathematics?

Quote:

Originally Posted by Lucy1
But i assumed if you were answering this you would know economics.

I don't think they have a economics help forum yet. Jameson! Don't steal that! I thought of it first!

Quote:

Originally Posted by Lucy1
Can anyone out there help?

With what?

In all seriousness, we need to know everything about the problem. If someone is taking time to help you, and they request more info, give it to them. This is a small price to pay for free math help.
• July 23rd 2009, 10:24 PM
Lucy1
Don't worry about it , it was a economics question , those two c's are different things. As i said if you knew economics you wouldn't need me to explain it , considering it was the business math section i though one of you might know exactly what i was talking about , i didn't want a grilling for not knowing how to do it , if i did i wouldn't be asking for help.

Regardless I have managed to solve it for myself. Thanks for taking the time to help/abuse anyways. Didn't mean to offend.

And btw that was all of the equation i was given. I have since managed to figure it out so i guess there's nothing wrong with the equation at all is there.
• July 24th 2009, 03:35 AM
Wilmer
Quote:

Originally Posted by Lucy1
.. As i said if you knew economics you wouldn't need me to explain it .....

You still don't "get it". If you knew mathematics, you would not have
asked such a question, which is a bit like:
2 apples cost 50 cents and 3 oranges cost 60 cents.
How much does a banana cost?
If you know fruits, you don't need me to explain that (Nerd)