The equlibrum level of consumption C and income Y for the simple two sector macroeconomic model satisfy the structural equation below

Economics Nov 04, 2021

The equlibrum level of consumption C and income Y for the simple two sector macroeconomic model satisfy the structural equation below. Y=C+I and C=ay+b . Where a and b are parameters in the range 00 , and I denote investment . ( 1) Express the system in Matrix form. (2) and hence express Y and C in the terms of a,b and I . (3) give an economic interpretation of the inverse matrix.