Let the equilibrium condition for national income be ?(?) + ?(?) = ?(?) + ? (? ′ , ? ′ ,? ′ > 0; ? ′ + ? ′ > ? ′ ) Where S, Y, T, I and G stand for saving, national income, taxes, investment and government expenditure respectively. All derivatives are continuous a. Interpret the economic meaning of the derivatives ? ′ , ? ′&? ′ b. Check whether the conditions for the implicit function theorem are satisfied. If so, write the equilibrium identity c. Find ??̅ ?? and discuss its economic implications
Let the equilibrium condition for national income be ?(?) + ?(?) = ?(?) + ? (? ′ , ? ′ ,? ′ > 0; ? ′ + ? ′ > ? ′ ) Where S, Y, T, I and G stand for saving, national income, taxes, investment and government expenditure respectively. All derivatives are continuous a. Interpret the economic meaning of the derivatives ? ′ , ? ′&? ′ b. Check whether the conditions for the implicit function theorem are satisfied. If so, write the equilibrium identity c. Find ??̅ ?? and discuss its economic implications
Chapter20: Monetary Policy
Section: Chapter Questions
Problem 3SQP
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Question
Let the equilibrium condition for
?(?) + ?(?) = ?(?) + ? (?
′
, ?
′
,?
′ > 0; ?
′ + ?
′ > ?
′
)
Where S, Y, T, I and G stand for saving, national income, taxes, investment and government
expenditure respectively. All derivatives are continuous
a. Interpret the economic meaning of the derivatives ?
′
, ?
′&?
′
b. Check whether the conditions for the implicit function theorem are satisfied. If so, write
the equilibrium identity
c. Find ??̅
??
and discuss its economic implications
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