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3. Output in an economy is 6,500. Government purchases, G, are 1,200. Taxes, T, are 800. Consumption is given by: C = 3, 700 2,
3. Output in an economy is 6,500. Government purchases, G, are 1,200. Taxes, T, are 800. Consumption is given by: C = 3, 700 2, [1001' + 0.20\" T) Investment is given by: I = 1, 000 4, 000:- (a) Find the equilibrium interest rate. (b) How much are national savings? (:2) Suppose now that G decreases to 950 (any other exogenous variables are un changed). Find the equilibrium interest rate and national savings. (d) Graph the effects of the decrease in G in the market for loanable funds
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