Write down the system of equations in matric form

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Reference no: EM133198583 , Length: 1 Pages

Assignment:

Consider the an economy described by the following equations

Y = C+I+G

C = C_o + MPC • Y_D

I= d - e . r

Y_D = Y - T

where Y is GDP, I is private investment, G is government's purchases of goods and services, C is private consumption, Y_D is the disposable income, T is taxes, MPC is the marginal propensity to consume, C_o is the autonomous consumption, and r is the real interest rate.

1. Write down the system of equations in matric form, considering the vector of endogenous variables [Y C I YD]^T.

2. Does the system have a unique solution? (Hint: if the coefficient matrix is inversible you know how solve the system, right?)

3. Solve the system of equations using the inverse matrix method.

Reference no: EM133198583

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