Let the national-income model be: Y = C + I0 + G C= a+b +b(Y - T) (a > 0, 0 < b < 1) G = gY (0 < g < 1) Consider the national-income model found above. Provide a general equilibrium solution for each endogenous variable (Y, C, G) as a formula of the parameters given. Create a numerical example by selecting and justifying a set of parameters that are close to real estimates for the US economy of $19 trillion GDP.
Let the national-income model be: Y = C + I0 + G C= a+b +b(Y - T) (a > 0, 0 < b < 1) G = gY (0 < g < 1) Consider the national-income model found above. Provide a general equilibrium solution for each endogenous variable (Y, C, G) as a formula of the parameters given. Create a numerical example by selecting and justifying a set of parameters that are close to real estimates for the US economy of $19 trillion GDP.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Let the national-income model be:
Y = C + I0 + G
C= a+b +b(Y - T) (a > 0, 0 < b < 1)
G = gY (0 < g < 1)
Consider the national-income model found above. Provide a general equilibrium solution for each endogenous variable (Y, C, G) as a formula of the parameters given. Create a numerical example by selecting and justifying a set of parameters that are close to real estimates for the US economy of $19 trillion
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