6. Consider an economy described by the following equations: Y = C + I + G, Y...

Question:

6. Consider an economy described by the following equations:

Y = C + I + G, Y = 5,000, G = 1,000, T = 1,000, C = 250 + 0.75(Y − T), I = 1,000 − 50r.

a. In this economy, compute private saving, public saving, and national saving.

b. Find the equilibrium interest rate.

c. Now suppose that G rises to 1,250. Compute private saving, public saving, and national saving.

d. Find the new equilibrium interest rate.

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Macroeconomics

ISBN: 9780716752370

5th Edition

Authors: N. Gregory Mankiw

Question Posted: