(10 points) Suppose that GDP (Y) is 5,000. Consumption is given by the equation C = 500+0.5(Y-T). Investment (I) is given by the equation I = 2,000 - 100r, where r is the real interest rate in percent. Government spending (G) is 1,000 and taxes (T) is also 1,000.

a) What are the equilibrium values of C, I and r?

b) What are the values of private saving, public saving, and national saving?

c) A technological innovation changes the investment function to I = 3000 - 100r. What are the new equilibrium values of C, I and r? (