model with a single-time-period lag on onsumption function, as described below, is initially in equilibrium and vel of I, is given at 500, Y, = C, + I, C, = 750 + 0.5Y s then increased to 650. Use difference equation analysis to find the va Y, in the fourth time period after this disturbance to the system. Wil a be within 1% of its new equilibrium level?

ENGR.ECONOMIC ANALYSIS
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ISBN:9780190931919
Author:NEWNAN
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Chapter1: Making Economics Decisions
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1. A Keynesian macroeconomic model with a single-time-period lag on the
consumption function, as described below, is initially in equilibrium and the
level of I, is given at 500.
Y, = C, + I,
C, = 750 + 0.5Y
I, is then increased to 650. Use difference equation analysis to find the value
of Y, in the fourth time period after this disturbance to the system. Will it
then be within 1% of its new equilibrium level?
Th
Transcribed Image Text:1. A Keynesian macroeconomic model with a single-time-period lag on the consumption function, as described below, is initially in equilibrium and the level of I, is given at 500. Y, = C, + I, C, = 750 + 0.5Y I, is then increased to 650. Use difference equation analysis to find the value of Y, in the fourth time period after this disturbance to the system. Will it then be within 1% of its new equilibrium level? Th
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