Economic

Assume that the model of an economy in the long run is given as follows: On the supply side, long-run aggregate supply, l', is produced according to the following technology: V = MET/TDI'E where the technology parameter A: 300, capital F = 9 units and labour I = 100 units. On the demand side: Y\" = C + I + G and the consumption function and the investment function are given respectively by: c = 400 + 0.8(Y f) I: 1555 65r Government expenditures are given by E = 800, taxes are given by ? = 300, and r is the real interest rate. (Here 1' is measured in percent. In your calculations use the values r = 2.3, r = 3.5 ete., rather than 0.023 and 0.035) 1. The amount of output supplied is units. A) Y: 12000 B) Y: 8380 C) Y: 9000 D) Y: 2600 2. In this economy national saving is equal to units: A) 2000 B) 840 C) 675 D) 1280