Suppose that consumer spending in period t, C t , is related to personal income two periods

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Suppose that consumer spending in period t, C_t, is related to personal income two periods earlier, I_{t – 2}, by

Deduce that if personal income increases by a factor 1.05 each period, that is

I+1= 1.051, then I, = 1.05', and hence 1-1 C=(C0.71)(-0.2) +0.71,(1.05)-1

Describe the behaviour of C_t in the long run.

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Modern Engineering Mathematics

ISBN: 9781292253497

6th Edition

Authors: Glyn James

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Question Posted: Jan 13, 2024 09:03 AM

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Suppose that consumer spending in period t, C t , is related to personal income two periods

Question:

C = 0.87512 0.2C_ (t2) -

Step by Step Answer:

General solution If at t 1 C C then C 0875...View the full answer

Modern Engineering Mathematics

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