Consider a national income model as: Y= C + I0 + G Y= National Income C= (Planned) Consumption Expenditure  I0= Investment  G= Government Expenditure    Consider Y= 20trillion, G= 4.2trillion, I0= 3.8 trillion. Explain the key elements missing from the National Income model. Add a new endogenous variable to represent that missing element or endogenize one of the exogenous variables to address this issue. C= a+ b(Y-T0)   (a>0, 0

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Consider a national income model as:

Y= C + I0 + G

Y= National Income

C= (Planned) Consumption Expenditure 

I0= Investment 

G= Government Expenditure 

 

Consider Y= 20trillion, G= 4.2trillion, I0= 3.8 trillion. Explain the key elements missing from the National Income model. Add a new endogenous variable to represent that missing element or endogenize one of the exogenous variables to address this issue.

C= a+ b(Y-T0)   (a>0, 0<b<1)

G= gY   (0<g<1)

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