Example The equations defining a model of two trading nations are given by Y, = C, + I} + X, = M, Y, = C, + Iţ + X, – M; C, = 0,8Y, + 200 M = 0,2Y,| C; = 0,9Y; + 100 M2 = 0.1Y; Express this system in matrix form and hence write Y, in terms of I'† and I4. Write down the multiplier for Y, due to changes in 1ţ and hence describe the effect on the national income of country 1 due to changes in the investment in country 2.

Example The equations defining a model of two trading nations are given by Y, = C, + I} + X, = M, Y, = C, + Iţ + X, – M; C, = 0,8Y, + 200 M = 0,2Y,| C; = 0,9Y; + 100 M2 = 0.1Y; Express this system in matrix form and hence write Y, in terms of I'† and I4. Write down the multiplier for Y, due to changes in 1ţ and hence describe the effect on the national income of country 1 due to changes in the investment in country 2.

Principles of Economics (MindTap Course List)

8th Edition

ISBN:9781305585126

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter25: Production And Growth

Section: Chapter Questions

Problem 1CQQ

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