Class Notes (835,873)
York University (35,286)
Economics (1,721)
ECON 2000 (18)
Lecture

the Change Operator.pdf

3 Pages
107 Views

School
Department
Economics
Course
ECON 2000
Professor
Mokhles Hossain
Semester
Fall

Description
“∆” the Change Operator: Suppose the initial value of the variable Y is 10. If Y increases to 20 then Change in Y = (20 – 10) = 10. Define, ∆Y = Change in Y. Rule # 1 If Y = X + Z, where Y, X, Z are all variables Then ∆Y = ∆X + ∆Z If Y = X - Z, where Y, X, Z are all variables ∆Y = ∆X - ∆Z Rule#2 If Y = a + bX, where a and b are constants and Y and X are variables Then ∆Y = ∆a + b∆X ∆a = 0, if a is a constant and remains as a constant. Application: RGDP = Y = Income = Expenditure. T = Net Taxes Y-T = Disposable income. Part of the disposable income is used to finance consumption expenditure and the rest is saved. Disposable income = Consumption + Households Savings, (Y-T) = C + PrS, Where, PrS = Households savings = Private sector’s savings. Now apply Rule 1. ∆(Y – T) = ∆C + ∆PrS Divide the equation by ∆(Y – T) – , or ( – ) ( – ) ( – ) ( – ) ( – ) MPC + MPS = 1 b + s = 1, where b = MPC, s = MPS. Therefore b = 1-s, or s = 1-b. We assume that b is a constant and it is greater than zero but less than 1. Why is b a constant? It tells us about households’ preference. Preference does not change
More Less

Related notes for ECON 2000
Me

OR

Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Join to view

OR

By registering, I agree to the Terms and Privacy Policies
Just a few more details

So we can recommend you notes for your school.