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Problem:

Consider the economy stated by following equations:

• Y = C + I + G

• Y = 5,000

• G = 1,000

• T = 1,000

• C = 250 + 0.75 (Y – T)

• I = 1,000 – 50 r

Required:

problem 1: In this economy, evaluate private saving, national saving, and public saving.

problem 2: Find out the equilibrium interest rate.

problem 3: Now imagine that G rises to 1,250. Evaluate private saving, national saving, and public income.

problem 4: Find out the new equilibrium interest rate.

Macroeconomics, Economics

  • Category:- Macroeconomics
  • Reference No.:- M910527

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