Consider the following national income model: Y = C + Io + G C = 26 + 0

Economics Nov 21, 2020

Consider the following national income model: Y = C + Io + G C = 26 + 0.8 (Y – T.) yd G= 0.25Y To = 50 To = 120 where Y, C and G are endogenously-determined income, consumption and government spending, respectively. Io and To are exogenously-determined investment expenditure and tax revenue. Without reducing the number of equations, solve for Y*, C* and G* by Cramer's rule.

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