23.2 Calculating the Macro Equilibrium

In this video, we continue with the closed, private economy from the previous video to illustrate how we can calculate the equilibrium by introducing a behavioral equation that defines how consumer behavior changes as income rises and then combines that equation with one of our equilibrium equations. As a result, we get an expression for equilibrium output, consumption and savings purely as a function of exogenous variables -- variables that are taken as given in the economy.