- Consider The An Economy Described By The Following Equations Y C I G C Co Mpc Yd I D E R Yd Y T Where Y Is Gdp I Is 1 (71.53 KiB) Viewed 19 times
Consider the an economy described by the following equations Y = C+I+G C = Co+MPC YD I=d-e.r YD=Y-T where Y is GDP, I is private investment, G is government's purchases of goods and services, C is private consumption, Yp is the disposable income, T is taxes, MPC is the marginal propensity to consume, Co is the autonomous consumption, and r is the real interest rate. 1. Write down the system of equations in matric form, considering the vector of endogenous variables [Y CI YD]T. 2. Does the system have a unique solution? (Hint: if the coefficient matrix is inversible you know how solve the system, right?) 3. Solve the system of equations using the inverse matrix method.