1. Consider an economy described as follows: Y = C+I+ G. Y = 8,000. G= 2,500. T= 2,000. C = 1000 + 2/3(Y-T). I=1,200 - 150i. a. In this economy, compute private saving, public saving, and national saving. b. Find the equilibrium interest rate. c. Now suppose that G is reduced by 600. Compute private saving, public saving, and national saving. d. Find the new equilibrium interest rate.
1. Consider an economy described as follows: Y = C+I+ G. Y = 8,000. G= 2,500. T= 2,000. C = 1000 + 2/3(Y-T). I=1,200 - 150i. a. In this economy, compute private saving, public saving, and national saving. b. Find the equilibrium interest rate. c. Now suppose that G is reduced by 600. Compute private saving, public saving, and national saving. d. Find the new equilibrium interest rate.
Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter18: Savings,investment And The Financial System
Section: Chapter Questions
Problem 5PA
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