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Treat the demand for capital curve as the investment curve in the loanable funds market. Suppose the national saving curve is given by: SNAT =
Treat the demand for capital curve as the investment curve in the loanable funds market. Suppose the national saving curve is given by: SNAT = 2r Where r is written in percentage points, so that if r = 5.5 this would be interpreted as 5.5% If total factor productivity is equal to 2, capital's income share is 50%, and there are 16 workers in the economy. Find the long-run equilibrium real interest rate and levels of national saving and investment
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