Question

It's a macroeconomic analysis problem. Kindly make a model from this in detail.

Exercises 1 In a certain period the economic system is in equilibrium. Take the initial equilıbrnum levels of the various variables as their ongin of measure- ment (i e. Yo = 0. C0-0, 0-0) and assume that in period 1 autonomous ınvestment increases by 100, afterwards remaning at the new level Examune the behaviour over tıme of Y, (both secursively and by solving the disference equation) given that the propensıty to consume is 0 8 and that the accelera- tion coefficient is 3 Calculatton. To compute recursıvely the successive values of Yt we preser to use the equation 4. Suppose that consumption is a function of lagged disposable income, q-bYd1-1, where Yd1= Y,-T, ; (a) Why has the introduction of taxation a stabulzing influence? (b) Suppose now that the government spends all its tax receipts plus a con- stant amount G, that is I-GT,. Discuss the stabilıty condıtions. Consider also the case in which there is a lag between tax receipts and expenditure, whence l' = G + T,-1.

Answer 1

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