Concept explainers
Exercises 17 and 18 concern a simple model of the national economy described by the difference equation
Yk+2 − a(1 + b)Yk+l + abYk = 1 (14)
Here Yk is the total national income during year k, a is a constant less than 1, called the marginal propensity to consume, and b is a positive constant of adjustment that describes how changes in consumer spending affect the annual rate of private investment.1
18. Find the general solution of equation (14) when a = .9 and b = .5.
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Linear Algebra and Its Applications (5th Edition)
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