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

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Chapter7: Macroeconomic Measurements, Part Ii: Gdp And Real Gdp
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Consider the national income model below
0 <
ac
ΟΥ
< 1;
Y-C(Y) – I (i)- Go=0
kY+L(i) - Mso = 0
ai
ƏL
< 0; < 0; k = positive constant
di
di
Transcribed Image Text:Consider the national income model below 0 < ac ΟΥ < 1; Y-C(Y) – I (i)- Go=0 kY+L(i) - Mso = 0 ai ƏL < 0; < 0; k = positive constant di di
Suppose that while demand for money still depends on Y as specified, it is now no longer affected
by the interest rate.
• How should the system of equations above be revised?
• Write the new Jacobian and call it J'. Is J'| numerically (in absolute value) larger or smaller than
|J|?
Transcribed Image Text:Suppose that while demand for money still depends on Y as specified, it is now no longer affected by the interest rate. • How should the system of equations above be revised? • Write the new Jacobian and call it J'. Is J'| numerically (in absolute value) larger or smaller than |J|?
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