1. A Keynesian macroeconomic model with a single-time-period lag on theconsumption function, as described below, is initially in equilibrium and thelevel of I, is given at 500.Y, = C, + I,C, = 750 + 0.5YI, is then increased to 650. Use difference equation analysis to find the valueof Y, in the fourth time period after this disturbance to the system. Will itthen be within 1% of its new equilibrium level?Th

The time path for the GDP is calculated through the complementary and particular solution. Yt = Yc…

model with a single-time-period lag on onsumption function, as described below, is initially in equilibrium and vel of I, is given at 500, Y, = C, + I, C, = 750 + 0.5Y s then increased to 650. Use difference equation analysis to find the va Y, in the fourth time period after this disturbance to the system. Wil a be within 1% of its new equilibrium level?

model with a single-time-period lag on onsumption function, as described below, is initially in equilibrium and vel of I, is given at 500, Y, = C, + I, C, = 750 + 0.5Y s then increased to 650. Use difference equation analysis to find the va Y, in the fourth time period after this disturbance to the system. Wil a be within 1% of its new equilibrium level?

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter14: Macroeconomic Policy: Tradeoffs, Expectations, Credibility, And Sources Of Business Cycles

Section: Chapter Questions

Problem 9E

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