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(3) Kindly solve ASAP. Thanks. 3. Let Yt denote GDP, It total investment, and St total saving, all in period t. Suppose that savings are
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3. Let Yt denote GDP, It total investment, and St total saving, all in period t. Suppose that savings are proportional to GDP, and that investment is proportional to the change in income from period t to t+1. Then, for t=0,1,2,, (i) St=Yt (ii) It+1=(Yt+1Yt) (iii) Si=It The last equation is the equilibrium condition that saving equals investment in each period. Here and are positive constants, and we assume that >>0. Deduce a difference equation determining the path of Yt, given Y0, and solve it. 3. Let Yt denote GDP, It total investment, and St total saving, all in period t. Suppose that savings are proportional to GDP, and that investment is proportional to the change in income from period t to t+1. Then, for t=0,1,2,, (i) St=Yt (ii) It+1=(Yt+1Yt) (iii) Si=It The last equation is the equilibrium condition that saving equals investment in each period. Here and are positive constants, and we assume that >>0. Deduce a difference equation determining the path of Yt, given Y0, and solve it Kindly solve ASAP. Thanks.
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