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Economics 214

Economics 214. Lecture 13 Systems of Equations. Examples of System of Equations. Demand and Supply IS-LM Aggregate Demand and Supply. Demand and Supply. IS-LM. Solving System of Equations. Repeated Substitution Matrix Algebra or linear Algebra. Solving System of Equations.

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Economics 214

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  1. Economics 214 Lecture 13 Systems of Equations

  2. Examples of System of Equations • Demand and Supply • IS-LM • Aggregate Demand and Supply

  3. Demand and Supply

  4. IS-LM

  5. Solving System of Equations • Repeated Substitution • Matrix Algebra or linear Algebra

  6. Solving System of Equations • Economic Models typically consist of a number of equations that represent identities, behavioral relationships, and conditions that constitute an equilibrium. • These equations include both variables, which are economic quantities and parameters, which are unvarying constants.

  7. Solving Systems of Equations • Variables in a system are exogenous if determined outside the system or endogenous if the are determined within the system. • A solution to the model is a representation of the endogenous variables as functions of only the parameters of the model and the exogenous variables.

  8. Solving our Demand and Supply model

  9. Solving our Demand & Supply Model

  10. Solving our IS-LM Model

  11. Solving our IS-LM Model

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