6. (20%) Consider a macroeconomic Y=C+I+G C = a + b(YT) T = tY Where Y,...

 

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6. (20%) Consider a macroeconomic Y=C+I+G C = a + b(YT) T = tY Where Y, C, I, G, and T, are, respectively, national income, consumption, investment, government expenditures, and taxes and G, and I are given, i.e. they are exogenous variables. a. Put this model in matrix form: model: (equilibrium condition) 0 <a, 0 < b < 1, (consumption function) 0 < t < 1, (tax function) 19-1 b. Solve for Y, C and using Cramer's rule. c. Suppose a = 40, b = 0.9, G = 500 and t = 0.2. Find the equilibrium values of Y, C and T. 6. (20%) Consider a macroeconomic Y=C+I+G C = a + b(YT) T = tY Where Y, C, I, G, and T, are, respectively, national income, consumption, investment, government expenditures, and taxes and G, and I are given, i.e. they are exogenous variables. a. Put this model in matrix form: model: (equilibrium condition) 0 <a, 0 < b < 1, (consumption function) 0 < t < 1, (tax function) 19-1 b. Solve for Y, C and using Cramer's rule. c. Suppose a = 40, b = 0.9, G = 500 and t = 0.2. Find the equilibrium values of Y, C and T.

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Solution As Given YCIG 9 from erc YC IG from er cii c a bYT T ty c a bybT Cby 6T a bycb7 a b ci TtY ... View the full answer