Business I / Determinants
Practice question · Multiple choice

An economist’s two policy instruments act on two targets through matrix AA, and detA=0\det A = 0. What does this mean for policy?

Hints
  1. Singular = columns linearly dependent.
  2. Two levers that are secretly one lever.
Show the answer

D. The instruments are redundant; some targets are unreachable

Why

Zero determinant means the instrument columns are dependent: pulling lever 2 is a disguised multiple of pulling lever 1. The plane of targets collapses to a line, everything off that line is unreachable at any policy strength.

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