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 a. 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, and national saving. d. Calculate the new equilibrium interest rate.
Please help with this from c . Please make it make sense because I have seen answers that dont seem right. I would like graph of C as well showing the shifts and changes
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
a. In this economy, compute private saving,
b. Calculate the equilibrium interest rate.
c. Now suppose the G rises by 1,000. Compute private saving, public saving, and
national saving.
d. Calculate the new equilibrium interest rate.
Closed Economy : Y=C + I +G
a. Private Savings = Y-T-C
Private Savings = 7,000-2,000-(150+0.75(Y-T))
Private Savings = 7,000-2,000-(150+0.75(7,000-2,000))
Private Savings = 5,000-(150+3,750)
Private Savings = 5,000-3,900
Private Savings = 1,100
Public Savings = T-G
Public Savings = 2,000-4,000
Public Savings = -2,000
National Savings = Public Savings + Private Savings
National Savings =Y-C-G
National Savings =7,000-3,900-4,000
National Savings =-900
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