F(K, L) = AK¹/21/2 The capital and labor supply are equal to 100 each, A=10, G = 200 and T = 200. Compute the equilibrium values of output, overall labor income, consumption, public savings, national savings, investment, and the interest rate. Suppose now government spending increases to G=250 (everything else stays the same). What happens to output, consumption, savings, investment and the interest rate? Compute the new values for these variables.

F(K, L) = AK¹/21/2 The capital and labor supply are equal to 100 each, A=10, G = 200 and T = 200. Compute the equilibrium values of output, overall labor income, consumption, public savings, national savings, investment, and the interest rate. Suppose now government spending increases to G=250 (everything else stays the same). What happens to output, consumption, savings, investment and the interest rate? Compute the new values for these variables.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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