(a) Explain the differences between a behavioral equation, a definition, an identity and an equilibrium condition....

 

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(a) Explain the differences between a behavioral equation, a definition, an identity and an equilibrium condition. Provide an example for each type of relationship. (b) Solve the goods market equilibrium condition for production, i. e., solve the fol- lowing equation for y Y = co + C₁ (Y− T) +Ī+ Ģ Subsequently, determine the following partial derivatives: ƏY Əy Əy ƏY Əy al' OG' aco' dc₁ ƏT The first three partial derivatives are referred to as tax multiplier, investment multiplier and government expenditure multiplier, respectively. Determine the sign of each of the multipliers. (a) Explain the differences between a behavioral equation, a definition, an identity and an equilibrium condition. Provide an example for each type of relationship. (b) Solve the goods market equilibrium condition for production, i. e., solve the fol- lowing equation for y Y = co + C₁ (Y− T) +Ī+ Ģ Subsequently, determine the following partial derivatives: ƏY Əy Əy ƏY Əy al' OG' aco' dc₁ ƏT The first three partial derivatives are referred to as tax multiplier, investment multiplier and government expenditure multiplier, respectively. Determine the sign of each of the multipliers.

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