Give the basic symbolic equations for the mainstream view of the economy. Identify each symbol in the equation with a brief explanation. Using this equation, what is one major explanation for instability in the economy from a mainstream perspective?

What will be an ideal response?

The basic equation for the mainstream theory is the aggregate expenditures equation: C + Ig + Xn + G = GDP where C is aggregate consumption, Ig is gross investment spending, Xn stands for net exports (exports minus imports), and G is government spending on goods and services. The instability in the economy arises from the instability in investment spending. The sharp increases or decreases in investment spending lead to changes in aggregate demand that result in demand-pull inflation or recession.