Differentiation of two similar systems

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SUMMARY

The discussion focuses on the differentiation of two economic systems represented by equations for consumption (C), investment (I), and government spending (G). In system 1, the differentiation of the C-equation yields f'(dY - dT), while in system 2, it results in f'(Y)*dY + f'(T)*dT + f'(r)*dr. The key difference lies in the specification of variables with respect to which the differentiation occurs, highlighting the importance of understanding partial derivatives in economic modeling.

PREREQUISITES
  • Understanding of basic economic models, particularly the components of aggregate demand.
  • Familiarity with differentiation techniques in calculus.
  • Knowledge of partial derivatives and their applications in multivariable functions.
  • Experience with economic notation and terminology used in macroeconomic analysis.
NEXT STEPS
  • Study the concept of partial derivatives in multivariable calculus.
  • Explore the implications of different functional forms in economic models.
  • Learn about the application of differentiation in macroeconomic analysis.
  • Review examples of aggregate demand components and their relationships in economic systems.
USEFUL FOR

Students of economics, particularly those studying macroeconomic theory, as well as educators and professionals seeking to deepen their understanding of differentiation in economic models.

monsmatglad
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Homework Statement


Hi. i need help with understanding task with differentiation.
i have two separate tasks, and i need help understanding why the solutions differ somewhat.
system 1:
Y = C + I + G
C = f(Y-T)
I = h(r)
r = m(M)

system 2:
Y = C + I + G
C = F(Y,T,r)
I = f(Y,r)

in system 1. when differentiating system 1, the "C-equation", the book gives then answer f'(dY - dT),,,, the derivative is not specified to be in respect to Y or T.
in system 2, when differentiating the C-equation", the book gives the answer: f'(Y)*dY + f'(T)*dT + f'(r)*dr
the symbol in the parentheses are meant to tell in what respect the derivation is.
the question is, why are the differentiating ( only of the C-equation, i know how the rest) different?

Mons
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The Attempt at a Solution

 
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