QUESTION FOUR (15 MARKS) a) Let the national income model be given as Y = C...

 

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QUESTION FOUR (15 MARKS) a) Let the national income model be given as Y = C + Io + G Cab(Y-To) G = gY (a > 0, 0 < b <1) (0 < g < 1) i) ii) Identify the endogenous variables Find the equilibrium national income b) The demand and supply functions of 2 commodities are given as Qa₁ = 18-3P₁ - P₂ Qs1 = -2 +4P₁₂ -2 + 3P₂ Qs2 = Qd2 = 12P₁ - 2P₂ Determine the equilibrium prices and quantities for the 2 goods using cramer's rule (6 marks) c) Prove young theorem using the following function q = x² + 5xy - y³ (1 mark) (4 mark) (4 marks) QUESTION FOUR (15 MARKS) a) Let the national income model be given as Y = C + Io + G Cab(Y-To) G = gY (a > 0, 0 < b <1) (0 < g < 1) i) ii) Identify the endogenous variables Find the equilibrium national income b) The demand and supply functions of 2 commodities are given as Qa₁ = 18-3P₁ - P₂ Qs1 = -2 +4P₁₂ -2 + 3P₂ Qs2 = Qd2 = 12P₁ - 2P₂ Determine the equilibrium prices and quantities for the 2 goods using cramer's rule (6 marks) c) Prove young theorem using the following function q = x² + 5xy - y³ (1 mark) (4 mark) (4 marks)

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