Exercise 1 (45%): In the textbook, Model I is the least complicated way to define the relations in the real economy. Then the activity Y is a function of exogenous factors explained outside the model. The model is based on the data found in the National Accounts and is defined as follows: Y= Cp+ Ip +G+ NX Cp = c(Y-T)+C° Ip = 1° - bi NX = NX° - aY T=T°+ tY. Based on such a model I, we establish a general function for the real economy which can then be as follows: Y=T=C=0+a(C° +1° + NX° + G - cT° - bi) The elements that are part of the general macroeconomic relationship have the following values: Cp = 0.75 (Y - T) + 1400 Ip = 1250 - 90i NX = 2800 - 0.3Y %3D T= 1200 + 0.19Y %3D G = 2000 i = 1.5. %3D

Exercise 1 (45%): In the textbook, Model I is the least complicated way to define the relations in the real economy. Then the activity Y is a function of exogenous factors explained outside the model. The model is based on the data found in the National Accounts and is defined as follows: Y= Cp+ Ip +G+ NX Cp = c(Y-T)+C° Ip = 1° - bi NX = NX° - aY T=T°+ tY. Based on such a model I, we establish a general function for the real economy which can then be as follows: Y=T=C=0+a(C° +1° + NX° + G - cT° - bi) The elements that are part of the general macroeconomic relationship have the following values: Cp = 0.75 (Y - T) + 1400 Ip = 1250 - 90i NX = 2800 - 0.3Y %3D T= 1200 + 0.19Y %3D G = 2000 i = 1.5. %3D

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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