Let the national income model be: Y = C + 10 + G C=a+b(Y-TO) (a>0, 0...
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Let the national income model be: Y = C + 10 + G C=a+b(Y-TO) (a>0, 0<b<1) G = gY (0 < g< 1) Y is the National Income. C is Consumption. G is Government Expenditure. TO is Net Taxes. 10 is Investment. Investment and Net Taxes are exogenous variables. (as a guide you can look at Schaum's p. 247) 1. a) Rewrite this set of equations into a matrix format 2. b) Find the inverse of the coefficients matrix 3. c) What restriction on the parameters is needed for a solution to exist? In other words, what restriction is needed in order to make the coefficients matrix non-singular? 4. d) Use the Inverse method to find the equilibrium values of National Income(Y), Consumption (C), and Government Expenditure (G). 5. e) Use the Cramer's rule to find the values of all three variables at the equilibrium. Are they equal to what you found in d)? Let the national income model be: Y = C + 10 + G C=a+b(Y-TO) (a>0, 0<b<1) G = gY (0 < g< 1) Y is the National Income. C is Consumption. G is Government Expenditure. TO is Net Taxes. 10 is Investment. Investment and Net Taxes are exogenous variables. (as a guide you can look at Schaum's p. 247) 1. a) Rewrite this set of equations into a matrix format 2. b) Find the inverse of the coefficients matrix 3. c) What restriction on the parameters is needed for a solution to exist? In other words, what restriction is needed in order to make the coefficients matrix non-singular? 4. d) Use the Inverse method to find the equilibrium values of National Income(Y), Consumption (C), and Government Expenditure (G). 5. e) Use the Cramer's rule to find the values of all three variables at the equilibrium. Are they equal to what you found in d)?
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Related Book For
Introduction to Real Analysis
ISBN: 978-0471433316
4th edition
Authors: Robert G. Bartle, Donald R. Sherbert
Posted Date:
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