Consider the following three-sector national income determination model: C = 20 + 0 . 85( Y T ) T = 25 + 0 . 25 Y I = 155 G = 100 1.

G

=

100

1.   (1 Mark) Determine the exogenous and endogenous variables in the system.

2.    (4 Marks) Solve the model presented in the above system of equations using the determinant and the inverse matrix for the equilibrium values of unknown variables.

3.   (4 Marks) Verify your solution in part (2) above by solving these simultaneous equations.

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