Econ 102 Roger E A Farmer Fall 2008 Assignment for Week Five 1.Consider the following difference equations. a) 121ttxx−=+b) 10.52−=−c) 1−+d) 10.52−−e) 11−f) 12−−g) 1xx−=In all cases txcan be positive or negative. For each equation i)Draw a graph of the equation and plot the line 1xx−=on the same graph. ii)Find the steady state (if it exists). If not – say why. iii)If a steady state exists say if it is stable or unstable. iv)Draw a trajectory that starts at 0tx=and plot where it will go on your graph. 2.In a two period economy there are three possible outcomes in period 2; A, B or C. The price of three arrow securities are given by 0.2,0.6,0.1AbCQQQ===a) How much would you expect the following assets to sell for in the market? Explain
This is the end of the preview. Sign up
access the rest of the document.