For your example of private savings, isn't part of the National Income, Y, business income? Couldn't we just as easily have assumed that a business brings in $100 and the business owner uses part of that money to buy new tools and machinery, with the rest being saved? Wouldn't this then lead to the conclusion that Y - I - G = C and that national savings equals consumption?
Amazingly explained... woww
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For your example of private savings, isn't part of the National Income, Y, business income? Couldn't we just as easily have assumed that a business brings in $100 and the business owner uses part of that money to buy new tools and machinery, with the rest being saved? Wouldn't this then lead to the conclusion that Y - I - G = C and that national savings equals consumption?
Sure, that’s another way to look at the same equation. In a closed economy, S=I
soo beautifully explained.Thank you!
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