Question
Consider the following model Note: , a > 0 1. Write down the exogenous and endogenous variables in the model. 2. 3. 4. 5.
Consider the following model Note: , a > 0 1. Write down the exogenous and endogenous variables in the model. 2. 3. 4. 5. 6. Find the equilibrium level of Y, Y* and C, C* (3 points) Sketch the Keynesian Cross diagram for this model, clearly labeling the relevant slope, intercepts, and the equilibrium level of Y (3 points) Find the Keynesian, investment (w.r.t I) multiplier, and fiscal (government) expenditure multiplier (3 points) Calculate the following comparative statistics a. b. C. dy* d dy d dy" db Y = C + I +G C = a + by I = - Br + aY G=G (1 point) (1 point) -(2 points) What is the difference in interpretation between (i) and (ii) (2 points)
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