Consider the national income model below0 <acΟΥ< 1;Y-C(Y) – I (i)- Go=0kY+L(i) - Mso = 0aiƏL< 0; < 0; k = positive constantdidi Suppose that while demand for money still depends on Y as specified, it is now no longer affectedby the interest rate.• How should the system of equations above be revised?• Write the new Jacobian and call it J'. Is J'| numerically (in absolute value) larger or smaller than|J|?

National income models can be used to analyze factors affecting economic growth, price levels, and…

Answered: Consider the national income model…

Consider the national income model below 0< ac Əy Y C(Y) I (i)- Go=0 kY+L(i) — Mso = 0 < 1; al di < 0; ƏL di < 0; k = positive constant

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter5: National Income Accounting

Section: Chapter Questions

Problem 9E

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Question

Consider the national income model below
0 <
ac
ΟΥ
< 1;
Y-C(Y) – I (i)- Go=0
kY+L(i) - Mso = 0
ai
ƏL
< 0; < 0; k = positive constant
di
di

Suppose that while demand for money still depends on Y as specified, it is now no longer affected
by the interest rate.
• How should the system of equations above be revised?
• Write the new Jacobian and call it J'. Is J'| numerically (in absolute value) larger or smaller than
|J|?

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Step 1: National income model, a brief intro

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