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We start by introducing the key ingredients in macroeconomic modelling: investment, production, income and consumption, and explain the corresponding equilibrium conditions. Modelling these quantities in discrete time, we describe the multiplier-accelerator model, a classic model of macroeconomic dynamics, and an example of a second-order recurrence equation. We then embark on describing how to solve linear constant-coefficient second-order recurrence equations in general. The general solution is the sum of the solution of a corresponding homogeneous equation and a particular solution. There is a general method for determining the solution of the homogeneous equation, involving the solution of a corresponding quadratic equation known as the auxiliary equation.
for all $x,y\in S$, where $S$ is a commutative semigroup and $\unicode[STIX]{x1D70E}~:~S\rightarrow S$ is an involution. Also, we find the Lebesgue measurable solutions $f:\mathbb{R}^{n}\rightarrow \mathbb{R}$ of the above functional equation, where $\unicode[STIX]{x1D70E}:\mathbb{R}^{n}\rightarrow \mathbb{R}^{n}$ is a Lebesgue measurable involution. As a direct consequence, we obtain the Lebesgue measurable solutions $f:\mathbb{R}^{n}\rightarrow \mathbb{R}$ of the classical d’Alembert functional equation