1. Consider the National Income Model: Y = C + Io + Go C = a +B(Y-T) T = y + SY a. Define and interpret each of the components of the model. Identify parameters and variables. b. Impose reasonable assumptions on the sings and values of the parameters. c. Solve for the equilibrium income. d. Obtain and discuss the six comparative-static derivatives.

1. Consider the National Income Model: Y = C + Io + Go C = a +B(Y-T) T = y + SY a. Define and interpret each of the components of the model. Identify parameters and variables. b. Impose reasonable assumptions on the sings and values of the parameters. c. Solve for the equilibrium income. d. Obtain and discuss the six comparative-static derivatives.

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter9: Demand-side Equilibrium: Unemployment Or Inflation?

Section9.A: The Simple Algebra Of Income Determination And The Multiplier

Problem 4TY

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