A country's domestic supply of saving, domestic demand for saving for purposes of capital formation, and supply of net capital inflows are given by the following equations:

S= 900 + 2,000r

I= 2,000 4,000r

KI= -100 + 6,000r

a. Assuming that the market for saving and investment is in equilibrium, find the current values fornational saving, capital inflows, domestic investment, and the real interest rate.

Instructions:Enterreal interestas percent valuesrounded to one decimal place.If you are entering any negative numbers, be sure to include a (-) in front of those numbers.

Real interest:%

National Savings:

Capital inflows:

Investment:

b. Assuming that desired national saving declines by 120 at each value of the real interest rate. Determine the effects of this reduction in domestic saving on the following values:

Real interest:%

National Savings:

Capital inflows:

Investment:

c. Assume instead that concerns about the economy's macroeconomic policies cause capital inflows to fall sharply so that now KI = -700+6,000r. Determine the effects of this reduction in capital inflows on the following values:

Real interest:%

National Savings:

Capital inflows:

Investment: