(35 points) Suppose you are given the following information about a closed economy: Y = $40,000 Real GDP = Income T = $6,000 Net tax collections Spr = $1,000 + 0.15*(Y-T) + 1,000*r Private saving function; r = real interest rate | = $5,600 2,000*r Total investment function G = $6,800 Government purchases d) (5 points) Without any calculations, what are the implications of changes in the amount of government deficit/surplus for the equilibrium interest rate in the economy? Note that in this model, a reduction in investment in the economy does not change long run GDP. Here the level of GDP was given exogenously; that is, the model cannot explain changes in GDP. However, our simple model here makes predictions about changes in the composition of GDP. e) (5 points) Suppose that the government increases its purchases without increasing its tax collection. What prediction does this model make about changes in the shares of consumption, investment, and government purchases in GDP? f) (5 points) Calculate the equilibrium real interest rate in this economy. Also, if you are told that the rate of inflation in this economy is 2.5%, what is the nominal rate of interest? g) (5 points) What are the total levels of saving and investment at this rate of interest? How much of the total saving is comprised of government saving and how much is private saving