2. Supply and demand in the neoclassical economy Consider an economy in which the consumption, investment and production functions are as follows. C: 90+0.7(YT) I = 250 207' Revised: September 22, 2022 Economics of Global Business Problem Set 2 F(K, L) : AK1/2L1/2 The capital and labor supply are equal to 100 each, A210, G = 200 and T = 200. Compute the equilibrium values of output, overall labor income, consumption, public savings, national savings, investment, and the interest rate. Suppose new government spending increases to G=300 (everything else stays the same). What happens to output, consumption, savings, investment and the interest rate? Compute the new values for these variables