7- We have the following data from the loanable funds market for Berberistan. Answer the following questions. Real interest rate Loanable funds Loanable funds demanded supplied (trillions of dollars) (percent per year) 3 10 4 4 5 5 8 6. 7 7 7 6 8 8 5 9 9. 4 10 a) What is the equilibrium real interest rate, total private saving and investment? (suppose that the government budget is balanced.) b) What will be the equilibrium real interest rate if the government’s budget becomes a deficit of $2 trillion? What will be the private investment at the new equilibrium? Define "crowding-out" and tell if there is crowding-out in this case.

7- We have the following data from the loanable funds market for Berberistan. Answer the following questions. Real interest rate Loanable funds Loanable funds demanded supplied (trillions of dollars) (percent per year) 3 10 4 4 5 5 8 6. 7 7 7 6 8 8 5 9 9. 4 10 a) What is the equilibrium real interest rate, total private saving and investment? (suppose that the government budget is balanced.) b) What will be the equilibrium real interest rate if the government’s budget becomes a deficit of $2 trillion? What will be the private investment at the new equilibrium? Define "crowding-out" and tell if there is crowding-out in this case.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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