13.2 Consider the following simple multiplier-accelerator macroeconomic model: Ga- = b + b(C-G-1) Y = C++ G Note that investment is now a function of changes in consumption, rather than of changes in total GNP.

(a) Determine the characteristic equation for this model, and find the associated characteristic roots.

(b) Find the relationships between values of

a, and by that determine what kind of solution the model will have. Draw a diagram that corresponds to that of Fig. 13.1.

(c) What is the impact multiplier corresponding to a change in G,? What is the total long-run multiplier corresponding to a change in G,?