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Income Analysis ASSIGNMENT 1

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Income Analysis

ASSIGNMENT 1. Given the model, ( ) ( ) 0 0 – 0, 0 1 C a b Y T Y C I G T d tY a b = + ? ? = = ? + + + a) How many endogenous variables are there? b) Find the equilibrium values of Y T C , and 2. Find the equilibrium value of Y C and from the following: 0 0 1 2 0 0 25 6 16 and 14 Y C I G C Y I G = + + = + = = 3. Consider the following structural model of Group 7 class of Ecomaths students. 0 1 0 1 2 1 t t t t t t t t t C a a Y I b bY b Y Y C I G − = + = + + = + + Find the reduced form of the model, consumption and income. 4. Consider the following ( ) ( ) 40 0.6 1 20 0.1 0.4 2 C Y I Y r Y C I = + − − − = + + − − − = + Where C is consumption, I is investment and Y is National income Find the reduced form of the equation of C, I and Y