Suppose that gdp is 5000. consumption is c1000.3y-t., Ask an Expert

Economics

Suppose that GDP (Y) is 5,000. Consumption is C=1,000+.3(Y-T). Investment is I=1500-50r, where r is the real interest rate. Taxes (T) are 1,000 and government expenditures (G) are 1,500.

a). Calculate the equilibrium values of C, I, and r.
b). Calculate the equilibrium values of private saving, government saving, and total saving.
c). Now suppose that there is a technological innovation that makes businesses want to invest more, so that the new investment function is I=2,000-50r. Calculate the new equilibrium values of C, I, and r.
d). Calculate the new equilibrium values of private saving, government saving, and total saving.

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Macroeconomics, Economics

Category:- Macroeconomics
Reference No.:- M9295131

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