Consider the following two equations, which describe the long-run investment and national savings equations for an economy. I = 0.03Y – 137i + 243 NS = 0.07Y + 363i – 5, 189 Suppose potential GDP is equal to $135,000. The real interest rate that will lead to equilibrium in the financial capital market is i* = %? Express your answer in percentage terms, rounding to one decimal place. Do not include the %-sign in your answer. For example: if i = 0.0199, type: 2.0 Suppose you observe Investment = $4, 318. You would conclude that: • i is i". Choose from: greater than, less than, equal to • the demand for financial capital is the supply. Choose from: greater than, less than, equal to, ambiguously different from • to restore the equilibrium, the real interest rate must Choose from: rise, fall, remain constant, change ambiguously Suppose tax revenues collected by the government falls. This will cause equilibrium Investment levels to Choose from: increase, decrease, remain unchanged

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