Suppose that while demand for money still depends on Y as specified, it is now no longer affected by the interest rate. Consider the national income model below0 <acΟΥ< 1;Y – C(Y) – I(i) — Go=0kY + L(i) — Mso = 0alді< 0;ƏLdi< 0; k = positive constant Find the new comparative static derivatives

National income models can be used to explore characteristics impacting economic expansion,…

Answered: Consider the national income model…

Consider the national income model below Y – C(Y) – I (i) — G₁ = 0 = 0 kY + L(i) − Mso ac 0< < 1; ΟΥ al ді < 0; ƏL ді < 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

Suppose that while demand for money still depends on Y as specified, it is now no longer affected by the interest rate.

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

Find the new comparative static derivatives

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Step 1: National income model, a brief intro

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Step 2: Revisioning the equations

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Step 3: Deriving the Jacobian matrix

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Step 4: Finding the derivatives of the new comparative statics

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