Consider an economy described by the following equations:

Y = C + I + G Y = 5,000 G = 1,000 T = 1,000 C = 250 + 0.75(Y T) I = 1,000 50 r.

a. In this economy, compute private saving, public saving, and national saving.

b. Find the equilibrium interest rate.

c. Now suppose that G rises to 1,250. Compute private saving, public saving, and national

saving.

d. Find the new equilibrium interest rate