Consider an economy described by the following equations: Y=C + I +G Y=7,000 G=4000 T=2,000 C=150+0.75(Y-T) I=1,000-50r In this economy, compute private saving, public saving and national saving. Calculate the equilibrium interest rate. Now suppose the G rises BY 1,000. Compute private saving, public saving, and national saving. Calculate the new equilibrium interest rate
Consider an economy described by the following equations: Y=C + I +G Y=7,000 G=4000 T=2,000 C=150+0.75(Y-T) I=1,000-50r In this economy, compute private saving, public saving and national saving. Calculate the equilibrium interest rate. Now suppose the G rises BY 1,000. Compute private saving, public saving, and national saving. Calculate the new equilibrium interest rate
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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- Consider an economy described by the following equations:
Y=C + I +G
Y=7,000
G=4000
T=2,000
C=150+0.75(Y-T)
I=1,000-50r
- In this economy, compute private saving,
public saving and national saving. - Calculate the equilibrium interest rate.
- Now suppose the G rises BY 1,000. Compute private saving, public saving, and national saving.
- Calculate the new equilibrium interest rate.
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