The economy can be described by the following equations. (Note: for this problem express the interest rate in percentage terms. For example, ?% is ? = ? and not ? = ?. ??)

?

1 Y = K3L3 K = 1,000, L = 8,000 C = 100 + 0.5(Y -T) I = 1000 - 50r G = 1500 T = 200 a. What is i. total output? (2 pts) ii. the real rental price of capital? (2 pts) iii. the real wage rate? (2 pts) iv. total wage income? (2 pts) b. What is i. private saving? (2 pts) ii. public saving? (2 pts) iii. the equilibrium real interest rate? (3 pts)