Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Hello. I am stuck and I need some helpon the question attached. Thanks. 3. (25 points) Desired consumption for an economy is given by the

Hello. I am stuck and I need some helpon the question attached. Thanks.

image text in transcribed
3. (25 points) Desired consumption for an economy is given by the equation C - 1200 + .65Y -4500r. Government purchases are given by G = 1600. (a) Write an expression relating desired saving, S", to Y and r. (b) Suppose that output Y is 12,000. Graph the relationship between desired saving, S", and the real interest rate r. (Your graph should include properly labeled axes and an indication of the scale on each axis.) (c) If desired investment for the economy is given by the equation - 2000 -5500r, calculate the equilibrium real interest rate for the economy. (d) Using the equilibrium real interest rate that you calculated in part (c), calculate the equilibrium level of saving, investment, and consumption in the economy. Does Y- C + / + G in equilibrium? (e) Add the relationship between desired investment and the real interest rate to your graph in part (b), and show the equilibrium values of r, S" and / from parts (c) and (d)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Economics Of The Sulphur Industry

Authors: Jared E Hazleton

1st Edition

1317353927, 9781317353928

More Books

Students also viewed these Economics questions

Question

Explain the importance of intersectionality in sampling.

Answered: 1 week ago

Question

1. Let a, b R, a Answered: 1 week ago

Answered: 1 week ago