(Answered) National savings sample homeworkquestion let the following

Economics

National Savings Sample Homework

Question: Let the following equations characterize an economy: (note the addition of a tax

rate on output)

Y = C + I + G

Y = 200

C = 23 + 0.8(Y-T)

I = 50 - 9r

G = 60

T = 40 + 0.1Y

Calculate national saving, private saving, and public saving.

Determine the equilibrium interest rate.

Suppose that output increases to 209. Redo the calculations in (a) and (b). Explain (in terms of savings and investment) the reason for the interest rate change.

What caused the change in private savings? Why did public savings change?

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