Question 1 The economy of Ogdenville can be characterized by the following agents: Consumers, C = 350 + 0.8{YT) Output, Y 2 300-0 Government expenditures, G = 50-0 Taxation, T = 50-0 Investors, | = 750125r Markets are fully competitive and the equilibrium condition for markets are: Goods and service market: Y 2C + | + G Financiai market: | = S a. [3 points] Find the private, public and national saving rate. B. [2 points] Find the equilibrium level of output a. [2 points] Find the equilibrium level of investment a. [2 points] Find the market clearing interest rate Question 2 The economy of North Haverbrook is comprised of 30,026 working able inhabitants and hold a capital stock of 45,000. Th rough empirical work, it was discovered that the share of labour income {wage} was 10% of GDP {turns out they don't have schools), share of capital was 90% and that using a cobbDouglas production function was able to properly approximate the production behaviour of this economy. And that tech (A) is 1. a. [2 points] what will be North Hayerbrook's output? b. [2 points] what is the equilibrium real wage rate? a. [2 points] what is the equilibrium real capital rental rate? a. [3 points] Given it's current situation, should North Haverbrook follow a policy to increase its labour force, or increase its capital stock? [having for goal to increase output]. Why? Show your logic. a. [3 points] Given it's currency situation {independent of d] }, should North Haverbrook follow a policy which would increase schooling, which will increase the share of labor to 15% [share of capital changes to 35%], or should it alternatively increase capital stock by 1000. Which will be its best option [having for goal to increase output}. Why? Show your logic. Question 3 The town of Cypress Creek is preparing to go to war against the American government. To do this, it is building a giant satellite laser! To build the laser, the government of the town will resort to taxation to fund its expenditure. The initial economy of Cypress Creek can be expressed by the following agents: Consumers, C = 25 + 0.95{YT] Output, Y = 5000 Government expenditures, (3 = 2000 Taxation, T = 2000 investors, I = 750125r Markets are fully competitive and the equilibrium condition for markets are: Goods and service market: Y =C + | + G Financia:I market: | = S a. [3 points] Find the private, public and national saving rate. b. [1 points] Find the equilibrium level of output c. [1 points] Find the equilibrium level of investment d. [1 points] Find the market clearing interest rate When it builds the Satellite, government and taxation change to Government expenditures, G = 4000 Taxation, T = 4000 e. [1 points] Find the private, public and national saving rate. f. [1 points] Find the equilibrium level of output 3. [1 points] Find the equilibrium level of investment h. [1 points] Find the market clearing interest rate Hank Scorpio, the towns' founder, announces that 1'even by increasing government spending and taxation, we are not worst off, as production has not changed!" i. [2 points] check to make sure output does not change. j. [2 points] find the consumption level in both scenario's (low and high government spending). k. [3 points] who is paying for the burden of taxation? (how is this new spending/taxation being distributed between investors and consumers) I. [2 points] as the government increases its spending (G from 2000 to 4000) why won't output change? Hank Scorpio makes another announcement "People of North Haverbrook! We must all work together in this to crush the American Government - I implore you to save you wages! Don't spend!" m. [2 points] by how much would consumers need to reduce their Marginal propensity to consume (MPC) such that the market clearing interest rate does not change?n. [2 points] Who will end up paying the burden of this project? [consumers or investors? And by how much?)