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Suppose that the economy is characterized by the following behavioral equations: C= 170 + 0.7YD I= 170 G= 150 T= 100
a. What does equilibrium output equal? Y=?
b. What does total demand equal? Z=?
c. Total demand is (greater than/equal to/ less than) production
In order to observe the correlations between each variable, the most effective method to use is Vector Autoregression (VAR). VAR estimation uses a system of simultaneous equations
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Different approaches to measure aggregate output
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