Eco607 Assignments 2

Solution 2024
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Solution:- paid assignment available
Question no:- contact on: 03445730890
Part(a) :-
State whether the national income equation is homogenous?
dy/dt = 0.5(C + I – Y )
C = 0.8y + 300
I = 900

Solution:-
If the national income equation is homogeneous we check if it is satisfied the condition :

dy/dt = 0.5 ( C + I – Y ) -> in eq (1)

Put value C & I in eq (1)
dy/dt = 0.5(0.8Y + 300 + 900 – Y )

dy/dt = 0.5( 1200 – 0.2 Y ). 100% correct solution

dy/dt = 600 – 0.1 Y
dy/dt + 0.1 Y = 600 -> eq (2)
As b= 600 so b ≠ 0 ; non homogeneous case
As a= 0.1 so a ≠ 0 ; non homogeneous case
A differential equation is homogeneous if it can be written in the form dy/dt = f(y) where f(y) is
a function of y alone and does not contain any constant term .
In this case the eq 2 is not homogeneous.

Part (b) :-
Find the time-path of national income of the economy; Y(0) = 9000 million
Dollars .

Solution :-
As Eq (2) in
dy/dt + 0.1Y = 600
First order differential equation for national income.

dy/dt = dy/dt , a= 0.1 , b= 600. , Y= Y , y(0) = 9000

As b= 600 so b ≠ 0 ; non homogeneous case
As a= 0.1 so a ≠ 0 ; non homogeneous case with a ≠ 0
Therefore the definite solution of time path of NHC a≠0

Y(t) = { y(0) – b/a } e^(-at) + b/a

Substituting values of y, a , b , and y(0) respectively
Y(t) = { 9000 – 600/0.1 } e^(-0.1t) + 600/0.1
Y(t) = { 9000 – 6000 } e^(-0.1t) + 6000
Y(t) = 3000e^(-0.1t) + 6000
It is definite Time path of national income of the economy.
Y(t) = 3000e^(-0.1t) + 6000

The end