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Consider an economy described by the following equations:Y = C I G, Y = 5000 G = 1000, T = 1000,C = 250+ .75(Y-T) and I = 1000 -50r

a. In this economy, compute private saving, public saving, and national saving.
b. Find the equilibrium interest rate.
c. Now suppose that G rises to 1250. Compute private saving, public saving, and national saving.
d. Find the new equilibrium interest rate.

Microeconomics, Economics

  • Category:- Microeconomics
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