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A standard macroeconomic model consists of these two equations: M = l*P*Y + L(r) and S(y,r,g) = I(Y,r) M, l and P are positive constants, and L, S, I...

This question was answered on Jan 27, 2014. View the Answer
A standard macroeconomic model consists of these two equations:

M = l*P*Y + L(r) and S(y,r,g) = I(Y,r)

M, l and P are positive constants, and L, S, I are differentiable functions. Assume that g is a parameter. Differentiate the system and find expressions for dy/dg and dr/dg by using Cramer’s rule.
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A standard macroeconomic model consists of these two equations: M = l*P*Y + L(r) and S(y,r,g) = I(Y,r) l*P*Y + L(r) = M
dI*PY + IPdY+ IYdP + Lrdr = dM
or, IPdY+ Lrdr = dM – dI*PY – IYdP I(Y,r)...

This question was asked on Jan 25, 2014 and answered on Jan 27, 2014.

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