Explain the difference between given expressions, International Economics

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Q. Explain the difference between the following two expressions:

Y = C(Yd) + I + G + CA(EP*/P, Yd) and

Y = C + I +G + CA

Answer: The first expression corresponds to a behavioral equation and thus may express equilibrium conditions for the output market or the aggregate desired demand for output. The second equation is merely an identity that is always true.


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