Question 1 (16 marks) In a closed economy, if the national income is $5,000, consumption is $2,000, taxes are $800 and government purchases are $600. Assume the economy is in the long run. a. c. Calculate the amount of public saving. Show your workings. (2 marks) b. What is the level of private investment? Show your workings. (3 marks) Use a well-labeled loanable fund market diagram to show the effect of increasing business confidence on the market. Explain. (5 marks) d. Assume now consumption depends negatively on the interest rate, which case, c) ord) will result in a larger change in the equilibrium investment due to the increasing business confidence? Explain your answer in words. (6 marks)