Disaggregating Aggregate Income

        Y ≡ C + T + S

• 3 ways you can dispose of income

  • Consumption (C)

  • Taxes (T)

  • Savings (S)

    • Residual; no connotation of virtue

• Combine the identities

        Y ≡ C + T + S ≡ GDP ≡ C + I + G + (X - M)

• Simplify:

            C + T + S ≡       C + I + G + (X - M)