Question: Suppose the following consumption function. C = C 0 + C 1 ( Y - T ) Let C 0 = 1 7 A =
Suppose the following consumption function.
Let
Also, let the initial value of production be the following:
Calculate the implied value of call it Give the answer as an integer.
Calculate the change in inventories. If inventories decline, give a negative answer. Give the answer as an integer.
Based on your answer for the change in inventories, how much will the producer produce next period?
Based on your answer for what will demand be next period?
Based on your previous two answers, what is the second change in inventories?
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