Suppose that an equation for investments and savings is described by an exponential function: Where I is the level of investments in an economy, S is the level of savings, Y is the gross domestic product, P is the total population, and & and a are constants. a. Derive a linear (in parameters) equation from the exponential function with In In i as the left-hand side variable and s (saving rate) on the right-hand side. Note that i=+ (investment per capita) and s = b. Identify the slope and intercept in the derived equation in (a). What could be the relationship between i and s? Provide an economic explanation. c. Derive a formula of the slope parameter in the linear equation in (a) for the interpretation
Suppose that an equation for investments and savings is described by an exponential function: Where I is the level of investments in an economy, S is the level of savings, Y is the gross domestic product, P is the total population, and & and a are constants. a. Derive a linear (in parameters) equation from the exponential function with In In i as the left-hand side variable and s (saving rate) on the right-hand side. Note that i=+ (investment per capita) and s = b. Identify the slope and intercept in the derived equation in (a). What could be the relationship between i and s? Provide an economic explanation. c. Derive a formula of the slope parameter in the linear equation in (a) for the interpretation
College Algebra (MindTap Course List)
12th Edition
ISBN:9781305652231
Author:R. David Gustafson, Jeff Hughes
Publisher:R. David Gustafson, Jeff Hughes
Chapter5: Exponential And Logarithmic Functions
Section5.2: Applications Of Exponential Functions
Problem 44E: Use a graphing calculator to solve each problem. In Example 4, suppose that a birth control program...
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Suppose that an equation for investments and savings is described by an exponential function:
Where I is the level of investments in an economy, S is the level of savings, Y is the gross
domestic product, P is the total population, and & and a are constants.
a. Derive a linear (in parameters) equation from the exponential function with In In i as the
left-hand side variable and s (saving rate) on the right-hand side. Note that i =
(investment per capita) and s =
b. Identify the slope and intercept in the derived equation in (a). What could be the
relationship between i and s? Provide an economic explanation.
c. Derive a formula of the slope parameter in the linear equation in (a) for the interpretation
of the changes in the variables. Interpret the resulting equation.
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