1) When deciding how much of their income to save for retirement, should workers consider the real or the nominal interest rate that their savings will earn? Explain.

2)Suppose GDP is $8 trillion, taxes are $1.5 trillion, private saving is $0.5 trillion, and public saving is $0.2 trillion. Assuming this economy is closed, calculate consumption, government purchases, national saving, and investment.

3)This chapter explains that investment can be increased both by reducing taxes on private saving and by reducing the government budget deficit.

a)Why is it difficult to implement both of these policies at the same time?

b) What would you need to know about private saving in order to judge which of these two policies would be a more effective way to raise investment?