Let aggregate national income be given byY; = Ct + It + GtWhere C, I and G are consumption, investment and government expenditure. Assumethat consumption is given byC = mY;Investment is given byI = i + a(Yt-1- Yt-2)And government expenditure declines over time according toG = Go(1 – 8)*,0 < 8 < 1Where d is the exogenous rate of decline of government expenditure(i)Derive the linear second order difference equation.(ii)Solve the difference equation.

The national income is given by The consumption rate is given as The investment equation is given as…

Let aggregate national income be given by Yt = Ct + It + Gt Where C, I and G are consumption, investment and government expenditure. Assume that consumption is given by Investment is given by Ct = myt It = 1 + α(Yt-1 - Yt-2) And government expenditure declines over time according to Gt = Go (1 - 8)t, 0<8 <1 Where is the exogenous rate of decline of government expenditure Derive the linear second order difference equation. Solve the difference equation. (i) (ii)

Let aggregate national income be given by Yt = Ct + It + Gt Where C, I and G are consumption, investment and government expenditure. Assume that consumption is given by Investment is given by Ct = myt It = 1 + α(Yt-1 - Yt-2) And government expenditure declines over time according to Gt = Go (1 - 8)t, 0<8 <1 Where is the exogenous rate of decline of government expenditure Derive the linear second order difference equation. Solve the difference equation. (i) (ii)

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

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Chapter1: Making Economics Decisions

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