(a) Consider a closed economy whose desired savings (Sd) and desired investment (I) are given by the following expressions: where r denotes the real interest rate. Find the equilibrium in the Goods market for this economy, and represent it in a graph. From now on, suppose there are two large Countries in the world, say Canada (Ca) and the United States (US). Sd 100+600r Id = 170-400r (b) To start with, assume that both Countries are closed economies. Their desired consumption (Cd) and desired investment (I) are given by: Coca = 10+ cca (Yca - Tca) - 100r 15 - 100r IC CUS IUS = 40+ cus (Yus - Tus) - 200r = 230 - 200r Moreover, output (Y), taxes (T), public expenditure (G), and the marginal propensity to consume (c) are as follows:

(a) Consider a closed economy whose desired savings (Sd) and desired investment (I) are given by the following expressions: where r denotes the real interest rate. Find the equilibrium in the Goods market for this economy, and represent it in a graph. From now on, suppose there are two large Countries in the world, say Canada (Ca) and the United States (US). Sd 100+600r Id = 170-400r (b) To start with, assume that both Countries are closed economies. Their desired consumption (Cd) and desired investment (I) are given by: Coca = 10+ cca (Yca - Tca) - 100r 15 - 100r IC CUS IUS = 40+ cus (Yus - Tus) - 200r = 230 - 200r Moreover, output (Y), taxes (T), public expenditure (G), and the marginal propensity to consume (c) are as follows:

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

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