Math Skills Prerequisite to ECON 3030
INTERMEDIATE MACROECONOMICS
 

The three problems below are representative of the mathematics required for dealing with the basic relationships in macroeconomics. You should be able to solve these sample problems even if you do not know what the symbols stand for. If you can solve them easily, then math will not be an obstacle to your learning intermediate-level macroeconomics. 


PROBLEM 1
 

Given:  
C = 750 + 0.80Y 

  I = 350 


G = 500 
 


Find:  
the values of Y and C that satisfy the equation: Y = C + I + G.









PROBLEM 2
 

Given:  
DY = [-b/(1-b)] DT 

  b = 2/3 
 
 

Find:  
the value of DT that yields a  DY of 200.
      The Greek letter "D" (Delta) means "change."
      The equation indicates that the change in Y is -b/(1-b) times the change in T.
      You need not (and should not) convert the fraction 2/3 to 0.666666666666.





       






PROBLEM 3
 

Given:  
C = a + bY, where a and b are known parameters 

  Y = C + I
 


Find:  
the equation that describes how C depends upon I.

Hint:  
You're looking for an equation in the form C = h + jI,
where h and j are expressions in a and/or b.




Application:  
Suppose that a = 400 and b = 0.75.




Find:  
the corresponding values of h and j.
Write C = h + jI, using the these numerical values.

When I = 600, how much is C?