Question: can you help me to solve clearly this question ? An economy is described by the following equations: 9th? to) :4 Y =C+IU+GO+ NX C

can you help me to solve clearly this question ?

can you help me to solve clearly this question ? An economy

An economy is described by the following equations: 9th? to) :4 Y =C+IU+GO+ NX C = a + b ( Y T) T =d +517 NX =fY g E where a, b, d, t, f and g are positive parameters. Y is the GDP, C is private consumption, Go is government's consumption, NX is net exports, T is taxes and E is the real exchange rate. Assume that this country uses a xed exchange rate regime (thus E is exogenously given). Write the above system of equation in matrix form. Consider the vector of endogenous variable to be X: [Y, C, T, NX]T. Under which condition(s) does this system have a unique solution? Solve the system by using matn'x inversion. Find the equilibrium value of GDP by using Cramer's rule. Check that you get the same answer as for question 5. What should be the value of E that keeps the GDP equal to its potential level, ?? Hint: you will have to solve the system for E, and that means the vector of endogenous variables will change a bit 'om the one from question 3

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Economics Questions!