Suppose that consumer spending in period t, C t , is related to personal income two periods
Question:
Suppose that consumer spending in period t, Ct, is related to personal income two periods earlier, It – 2, by
Deduce that if personal income increases by a factor 1.05 each period, that is
Describe the behaviour of Ct in the long run.
Transcribed Image Text:
C = 0.87512 0.2C_ (t2) -
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General solution If at t 1 C C then C 0875...View the full answer
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