00:01
So here's what we're given.
00:01
We're given that the savings rate is 20%.
00:04
That is total savings equals 20 % of income.
00:08
That's the marginal propensity to save, right? savings and then investment goes up by 50.
00:14
So let's remember this y equals c plus i plus g and x thing you've seen before.
00:18
Absolutely.
00:20
If we know that savings is equal to 0 .2i, right? i'm assuming this is disposable income.
00:28
Let's say that consumption is there.
00:30
For 0 .8 y, right? whatever the consumer is not saving after they pay taxes is what they're spending money on.
00:38
So i'm going to substitute this in to my equation for y.
00:44
Y equals to 0 .8y plus i plus g plus nx or 0 .2y equals i plus g plus nx.
00:58
Or if i, plus g plus nx, or if i divide by 0 .2, right? 0 .2, 0 .2, i get y is equal to i over 0 .2 plus g plus nx over 0 .2, right? so now we're looking at i plus 50, right? so what's going on here? well, as i plug in plus 50, i get equals to i over 0 .0...