Macroeconomics: Principles, Problems, & Policies
20th Edition
ISBN: 9780077660772
Author: Campbell R. McConnell, Stanley L. Brue, Sean Masaki Flynn Dr.
Publisher: McGraw-Hill Education
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Chapter 14, Problem 11DQ
To determine
The relation of decline in the real estate value, subprime mortgage loans and the mortgage backed securities to financial crisis of 2007-08.
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2. The demand and supply functions for two interdependent goods X and Y are givenbyQDX = 7 − 4PX + 2PYQSX = −6 + 4PX − PYQDY = 1 + PX − PYQSY = −4 − PX + 2PY(a) Find the market equilibrium condition for each good. (b) Express the equilibrium conditions in the matrix form Ax = b.(c) Find the inverse of matrix A. (d) Given your result in part (c), calculate the equilibrium prices. (e) What is the equilibrium quantity for goods X and Y ?
2. A two-sector macro-economic model satisfies the following structural equations:Y = C + I∗C = aY + bwhere 0 < a < 1 and b > 0 are parameters and I∗ denotes investment.(a) What are the exogenous and endogenous variables in this model? (b) Re-arrange this system of equations to express the endogenous variables in terms of the exogenous variables and parameters. (c) Express this system of equations in the matrix form Ax = b. (d) Show that the inverse of matrix A exists.
The equilibrium prices P1 and P2 for two goods satisfy the equations:−4P1 + P2 = −132P1 − 5P2 = −7(a) Express this system of equations in the matrix form Ax = b. (b) What is the determinant of matrix A? (c) Find the inverse of matrix A. (d) Using matrix algebra, calculate the equilibrium prices
Chapter 14 Solutions
Macroeconomics: Principles, Problems, & Policies
Ch. 14 - Prob. 1DQCh. 14 - Prob. 2DQCh. 14 - Prob. 3DQCh. 14 - Prob. 4DQCh. 14 - Prob. 5DQCh. 14 - Prob. 6DQCh. 14 - Prob. 7DQCh. 14 - Prob. 8DQCh. 14 - Prob. 9DQCh. 14 - Prob. 10DQ
Ch. 14 - Prob. 11DQCh. 14 - Prob. 12DQCh. 14 - Prob. 13DQCh. 14 - Prob. 14DQCh. 14 - The three functions of money are: LO14.1 a....Ch. 14 - Prob. 2RQCh. 14 - Prob. 3RQCh. 14 - Prob. 4RQCh. 14 - Prob. 5RQCh. 14 - Prob. 6RQCh. 14 - Prob. 7RQCh. 14 - Prob. 8RQCh. 14 - Prob. 9RQCh. 14 - Prob. 1PCh. 14 - Prob. 2PCh. 14 - Prob. 3PCh. 14 - Prob. 4PCh. 14 - Prob. 5P
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