00:01
So here we have an economy, right? this economy follows the national income accounting identity, cig.
00:07
We know that y is equal to 5 ,000.
00:09
We know that g is equal to 1 ,000.
00:12
We know that t is equal to 1 ,000.
00:15
And we have a consumption function of 250 plus 0 .75, y minus t.
00:21
And we also know that i is equal to 1 ,000 minus 50r.
00:27
So first of all, we want to think about private savings, and private saving is equal to s minus i.
00:38
Oh, sorry, it's just equal to s.
00:40
Sorry, the amount of savings, right? but this is also equal to the amount of investment in a closed economy, right? and the easiest way to say that is this is sometimes considered the expenditure approach, right? but if you also think about the income approach, you can also say that y is equal to c plus s plus t.
01:08
That is output is equal to your income.
01:14
Y is equal to what you consume, what you save, and the stuff you give to the government.
01:18
Those are your only options.
01:19
If you're a consumer, you either spend it, save it, or give it to the government.
01:24
So we can subtract these things together and you can get.
01:30
An identity talking about how savings is equal to investment...