Consider the four-sector macroeconomic model: Y = C + I + G + X-M C = aY + b Y = Y-T T = tY + T = d d = G = G X = X M =

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Consider The Four Sector Macroeconomic Model Y C I G X M C Ay B Y Y T T Ty T D D G G X X M 1 (31.73 KiB) Viewed 54 times

Consider the four-sector macroeconomic model: Y = C + I + G + X-M C = aY + b Y = Y-T T = tY + T = d d = G = G X = X M = my, + M a. Use the information provided above to determine the pre-determined and endogenous variables. b. Find the reduced form equations for all the endogenous variables. Page 2 of 3 c. Write down the autonomous taxation multiplier. Deduce that an increase in T causes a decrease in Y on the assumption that a country's marginal propensity to import, m, is less than its marginal propensity to consume, a.