An economy has full-employment output yn of 6000 government, Ask an Expert

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An economy has full-employment output, Yn, of 6000. Government purchases, G, are 1200. Consumption is C = 3600-2000r + 0.10Y and investment is I = 12-400r, Y is output and r is the real interest rate.

A) Discover an equation relating national saving, S, to r, and Y.

B) Discover the real interest rate that clears the goods market. Suppose that output equals full-employment output (Yf)

C) Government purchases rise to 1440. |How does this increase change the equation describing national saving? Show the change graphically. What happens to the market-clearing real interest rate? (Draw a graph next page.)

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Microeconomics, Economics

Category:- Microeconomics
Reference No.:- M91226994

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