Problem 26-11 (algo)For the economy described below:C = 2,500 + 0.9(Y - T) - 8,000rIP = 2,200 - 8,000rG = 2,500NX = 0т 3,600a. Suppose that potential output Y* equals 31,600. What real interest rate should the Fed set to bring the economy to full|employment? You may take as a given that the multiplier for this economy is 10.Instructions: Enter all your responses as whole numbers.Real rate of interest:5 O %b. Suppose that potential output Y* equals 26,800. What real interest rate should the Fed set to bring the economy to fullemployment? You may take as given that the multiplier for this economy is 10.Real rate of interest:8 O %c. Show that the real interest rate determined in part a sets national saving equal to planned investment when the economy isat potential output. This result shows that the real interest rate must be consistent with equilibrium in the market for savingwhen the economy is at full employment.Planned investment P=3160 *National saving S= 3160

Note: assuming that the green tick is for the correct answer in parts a and b. The real interest…

c. Show that the real interest rate determined in part a sets national saving equal to planned investment when the economy is at potential output. This result shows that the real interest rate must be consistent with equilibrium in the market for saving when the economy is at full employment. Planned investment P = 3160 National saving S= 3160 *

c. Show that the real interest rate determined in part a sets national saving equal to planned investment when the economy is at potential output. This result shows that the real interest rate must be consistent with equilibrium in the market for saving when the economy is at full employment. Planned investment P = 3160 National saving S= 3160 *

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Consumption function: C=500+0.8Yd , net tax: T=500, government spending: G=500, investment: I=1200, export: X=500 and imprt: M=700. According to this Calculate the consumption and saving at Ye.
Suppose the economy is in equilibrium, and assume no government or foreign sector. If total saving equals 41750, then intended investment must equal...
Assume that a country experiences a permanent increase in its saving rate. Which of the following will occur as a result of this increase in the saving rate?
1.
Consider an economy described by the following equations: Y = C + I + G AND, Y = 20,000; G = 4,000; T = 4,000; C = 1000 + 0.80(Y − T); : I= 2,500 – 120r. national saving AND the equilibrium real interest rate equal: Select one: a. national saving 2200 AND the equilibrium real interest rate 2.5%. b. national saving 2500,AND the equilibrium real interest rate 2%. c. national saving 4000 AND the equilibrium real interest rate 1.5%. d. national saving 3200 AND the equilibrium real interest rate 2.5%.
Suppose the U.S. has an investment opportunity which costs $200 which will increase output from 100 to 110 per quarter. The investment would take effect after t = 0. What is the marginal product of capital (MPK)? What is the difference in the present value of future income in the U.S. of undertaking the investment if the real world interest rate is 8%? Should the U.S. borrow from abroad to fund the investment and why?
Answer the following in 10 minutes I’m studying.
To increase future living standards by pursuing higher current rates of investment spending, an economy must: Multiple Choice O allow higher rates of current consumption. reduce the current capital stock. reduce current rates of consumption spending. decrease the amount of future research and development spending
Hand written solutions are strictly prohibited
The figure below shows the investment demand curve for a fictitious country. Use the information in the figure to answer the question below. Expected rate of return and real interest rate (%) 16 DRHRENDSCSA32IO 15 14 13 12 11 10 9 8 5 Investment Demand 10 20 In stment demand curve 30 40 Investment (billions of dollars) 50
Please help with this from c and d. Please make it make sense because I have seen answers that dont seem right. With graphs as well if you can for the two.Consider an economy described by the following equations:Y=C + I +GY=7,000G=4000T=2,000C=150+0.75(Y-T)I=1,000-50ra. In this economy, compute private saving, public saving and national saving.b. Calculate the equilibrium interest rate. c. Now suppose the G rises by 1,000. Compute private saving, public saving, andnational saving.d. Calculate the new equilibrium interest rate.
1. The country Egalia has the following production function: Y = 500K^0.25L^0.75, where K denotes the amount of capital and L the amount of labor (which coincides with that of the population size). The number 500 in the production function indicates total factor productivity.