1 Assume that GDP ( Y ) is 6,000 Consumption ( C ) is given by the equation C 600 0 6( Y T ) 100 r Investment ( I ) is given by the equation I 2,000 100 r , where r is the real rate of interest in percent Taxes ( T ) are 500 and government spending ( G ) is also 500 b What are the values of private saving, public saving, and national saving c If Govt spending rises to 1,000, what are the new equilibrium values of C , I , and r d Illustrate what happens to S , I , and r using the loanable funds framework

Question

1 Assume that GDP ( Y ) is 6,000  Consumption ( C ) is given by the equation C   600   0 6( Y   T )   100 r   Investment ( I ) is given by the equation I   2,000   100 r , where r is the real rate of interest in percent  Taxes ( T ) are 500 and government spending ( G ) is also 500  b  What are the values of private saving, public saving, and national saving  c  If Govt spending rises to 1,000, what are the new equilibrium values of C , I , and r   d Illustrate what happens to S , I , and r using the loanable funds framework

Accepted Answer

The Answer is in the image, click to view ...

Question

1.Assume that GDP ( Y ) is 6,000. Consumption ( C ) is given by the equation C = 600 + 0.6( Y - T

Step by Step Solution

Step: 1

Get Instant Access to Expert-Tailored Solutions

Step: 2

Step: 3

Ace Your Homework with AI

Recommended Textbook for

Macroeconomics Principles Applications And Tools