2. Given the following Macro Model

Y=C+I+G0C=a+bYI=k+mY

(i) Solve the system for its endogenous variables by the substitution method (Y,C,I) and specify the government spending multiplier. (ii) Write the system in the matrix form AX=B and solve by the matrix inverse method. (iii) Solve the system by Cramers rule.

Answer rating: 100% (QA)

i To solve the system of equations using the substitution method Y C I G C a bY I k mY 1 Substitute ... View the full answer