Static expectation means the expectation of a variable in one period is going to be equal to the actual value of the variable in the previous period, which brings us to the relation Ye(t+1)=Yt.
We have Y(t+1)=C(t+1)+I(t+1) which means Y(t+1)=aYe(t+1)+yYe(t+1)^2 where Ye is the expectation, a is alpha and y is gamma.
Let's see what kind of a function Y(t+1) is. It's a convex function which passes through a line through origin when Y=1-a/y.
Being a convex function, in the long run, Y(t+1)=Y(t) along the line through the origin, Y(t+1)<Yt for the region below Y<1-a/y and it's the opposite in the other case, which means the value of Y in the long run approaches 0 or infinity depending upon whether Y< or > 1-a/y.
In the case of rational expectations, the long run value of Y(t+1) and Yt are the same. It's also the same in the case of adaptive expectations, just in case.
This plainly implies Yt=aYt+yYt^2. Therefore, the long run equilibrium value of Y is 1-a/y
Your answer is correct.
Check each options
A. (n+1)p=n(1+p) => np+p=n+np => p=n ; not possible.
B. np=(n-1)(1+p) = n-1+np-p => p=n-1 ; not possible.
C. np cannot be a position integer if (n+1)p is a positive integer.
Yes, and that's why I am not able to get why college has posted option b as Answer..
Can you help with question 43?
I am stuck on how to solve SIgma (300 - 50Di - 262.5 )^2.
On Mon, Jan 9, 2017 at 4:00 PM, Abhitesh [via Discussion forum] <[hidden email]> wrote:
Your answer is correct.
Check each options
A. (n+1)p=n(1+p) => np+p=n+np => p=n ; not possible.
B. np=(n-1)(1+p) = n-1+np-p => p=n-1 ; not possible.
C. np cannot be a position integer if (n+1)p is a positive integer.
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