hw3 - C = C + b ( Y T ) 2 M d = M s 3 I = I r 4 T = tY a)...

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ECONOMICS 331 Mathematical Economics Kevin Wainwright Homwork Assignment 3 From homework assignment 2 we had the following demand functions: q d 1 =20 2 p 1 + p 2 q d 2 =25+ p 1 3 p 2 UseCramer ’sRu leto f nd the inverse demand functions P i = f ( q i ,q j ) i =1 , 2 [3] In homework [2] you derived an expression for the IS and LM curves using the following macroeconomic model: goods market money market 1 Y = C + I + G 0 1 M d = kY β
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Unformatted text preview: C = C + b ( Y T ) 2 M d = M s 3 I = I r 4 T = tY a) Use Cramers rule to solve for the equilibrium level of income and interest rates, Y e and r e . b ) From your solution for Y e what is the coe cient in front of M s ? What is its sign? What is the economic interpretation of this coe cient? 1...
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This note was uploaded on 09/13/2009 for the course EOCNOMICS Econ 331 taught by Professor Kelvinkwainger during the Spring '09 term at Simon Fraser.

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