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2. Economists in Macroland, a closed economy, have estimated the following information about the economy for a particular year. 0 = 600+0.4YD T = 500
2. Economists in Macroland, a closed economy, have estimated the following information about the economy for a particular year. 0 = 600+0.4YD T = 500 G = 700 I = 1,300+0.1Y (a) Solve for the goods market equilibrium output. (b) Calculate the private saving, public saving, total saving and investment in Macroland. (c) Suppose the government spending increases by one dollar, what will be the change in the equilibrium output? What is the multiplier in this case? (d) Suppose Macroland is at its goods market equilibrium. Another team of economists estimate that the investment function in fact depends on the interest rate 2' (in percentage terms): I = 1, 500 + 021' 2002' Find the interest rate 2
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