Question: Consider the National -Income model with 3 endogenous variables, Y (national income), C (consumption), and t (taxes) (a, b > 0) Q=a-bP Q=-c+dP [demand]

Consider the National -Income model with 3 endogenous variables, Y (national income), C (consumption), and t

Consider the National -Income model with 3 endogenous variables, Y (national income), C (consumption), and t (taxes) (a, b > 0) Q=a-bP Q=-c+dP [demand] [supply] (a)Derive p* and Q* in equilibrium (when quantity supplied = to quantity demanded) (b) Examine the comparative-static properties of the equilibrium quantity and provide the economic meaning of it? (Note compute partial derivatives of p* with respect to parameters in the model. We discuss this in details in class during lecture)

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