2.1 Question 1 Consider the following model of the economy: Y, =C+I+GY, = 8,000 G, = 2,500 T, = 2,000 C, = 1,000+ (Y-7) 1₁ = 1,200-100r (a) In this economy, compute private saving, public saving, and national saving. (b) Find the equilibrium interest rate. (c) Now suppose that G is reduced by 500. Compute private saving, public saving, and national saving. (d) Find the new equilibrium interest rate.
2.1 Question 1 Consider the following model of the economy: Y, =C+I+GY, = 8,000 G, = 2,500 T, = 2,000 C, = 1,000+ (Y-7) 1₁ = 1,200-100r (a) In this economy, compute private saving, public saving, and national saving. (b) Find the equilibrium interest rate. (c) Now suppose that G is reduced by 500. Compute private saving, public saving, and national saving. (d) Find the new equilibrium interest rate.
Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter18: Savings,investment And The Financial System
Section: Chapter Questions
Problem 5PA
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![2.1 Question 1 Consider the following model of the economy:
Y, =C+I+GY, = 8,000 G, = 2,500 T, = 2,000 C, = 1,000+(y-7) I, = 1,200-100r (a) In this economy, compute
private saving, public saving, and national saving. (b) Find the equilibrium interest rate. (c) Now
suppose that G is reduced by 500. Compute private saving, public saving, and national saving. (d) Find
the new equilibrium interest rate.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ff550b9ef-deb3-4ad3-ac19-a7c13be85e06%2F5df7ac2b-fe10-4069-918b-c2e307f54130%2Fuwr2wtj_processed.jpeg&w=3840&q=75)
Transcribed Image Text:2.1 Question 1 Consider the following model of the economy:
Y, =C+I+GY, = 8,000 G, = 2,500 T, = 2,000 C, = 1,000+(y-7) I, = 1,200-100r (a) In this economy, compute
private saving, public saving, and national saving. (b) Find the equilibrium interest rate. (c) Now
suppose that G is reduced by 500. Compute private saving, public saving, and national saving. (d) Find
the new equilibrium interest rate.
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