Solve the following problems, showing all of your calculations .

Assume the following:

• GDP (Y) i= 5,000.
• C = 750 + 0.5(Y-T).
• I = 1500 - 50r, where r is the real rate of interest in percent.
• T = 1,250
• G = 1,125

1. What are the equilibrium values of C, I and r?
2. What are the values of private saving, public saving, and national saving?
3. A technological innovation increases investment to the function I = 2000 - 50r. What are the new equilibrium values of C, I and r?