Suppose that in period t, aggregate consumption Ct is a linear function of aggregate income in the previous period Y4-1

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Suppose that in period t, aggregate consumption Ct is a linear function of aggregate income in the previous period Y4-1

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Suppose That In Period T Aggregate Consumption Ct Is A Linear Function Of Aggregate Income In The Previous Period Y4 1 1
Suppose That In Period T Aggregate Consumption Ct Is A Linear Function Of Aggregate Income In The Previous Period Y4 1 1 (67 KiB) Viewed 24 times
Suppose that in period t, aggregate consumption Ct is a linear function of aggregate income in the previous period Y4-1 in the form: Ct = A + BY+-1 where A, B > 0 - If aggregate investment is a constant amount I and aggregate income is equal to consumption plus investment: Y = C++ 1 (a) Write out the difference equation for aggregate income. (b) Suppose the initial value of income Yo is given. Solve the above difference equation of aggregate income. (c) What restriction(s) must be placed on B so that a steady state exists and income converges monotonically to it? (d) What is the instantaneous impact and the long-run (steady state) impact of an increase in I on aggregate income?
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