Explain the Difference Between the Following Two Expressions

question 106

Essay

Explain the difference between the following two expressions:
Y = C(Y^d)+ I + G + CA(EP /P,Y^d)and
Y = C + I +G + CA

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Definitions:

Nominal Interest Rate

The interest rate before adjustments for inflation; the stated or named rate on a loan or financial product.

After-tax Real Interest Rate

The interest rate that an investor earns on an investment after paying taxes, adjusted for inflation.

Inflation Rate

The percentage increase in the price level of goods and services in an economy over a period of time, typically measured on a yearly basis.

Accountants

Professionals who perform financial functions related to the collection, accuracy, recording, analysis, and presentation of a business, organization, or individual's financial operations.