This is a matrices problem and in particular using Cramer's Rule to solve a National Income Model.
Write the following National Income Model in the form Ax = b and solve using Cramer's Rule:
C=α+βY
I=γ+θr
Y=C+I
Where income(Y), consumption(C) and investment(I) are endogenous; the rate of interest(r) is exogenous and α, β, γ and θ are known constants. Also find the slope of the IS curve.
By OTA: Said Hirsh, PhD (IP)
OTA Rating: 4.5/5
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