27. (15 points) Assume that GDP (Y) is 6,000. Consumption (C). is given by the equation C = 600 + 0.6(Y - T). Investment (I) is given by the equation I = 2,000 - 100r, where r is the real rate of interest in percent. Taxes (T) are 500 and government spending (G) is also 500.

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. If government spending rises to 1,000, what are the new equilibrium values of C, I, and r?

d. What are the new equilibrium values of private saving, public saving, and national saving?

28. (3 points) Suppose people in a closed economy reduce their saving. What will be the effect on real interest rate and investment?

29. (6 points) What is the effect of the following on the money supply?

a. Increase in currency-deposit ratio, keeping all other things constant

b. Decrease in reserve-deposit ratio, keeping all other things constant