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Using Up and Down arrows or a Dash for no change, show how an increase in government spending, holding other factors constant, affect the level of: a. public saving b. private saving c. national saving d. the equilibrium interest rate_ e. the equilibrium quantity of investment

Using Up and Down arrows or a Dash for no change, show how an increase in government spending, holding other factors constant, affect the level of: a. public saving b. private saving c. national saving d. the equilibrium interest rate_ e. the equilibrium quantity of investment

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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10. Consider a competitive economy in which factor prices adjust to keep the factors of production fully employed, and the interest rate adjusts to keep the supply and demand for goods and services in equilibrium. We can describe this economy thru the following set of equations: Y=AK L(-a) Y=C+I+G C=C(Y-T) I=1(r) Using Up and Down arrows or a Dash for no change, show how an increase in government spending, holding other factors constant, affect the level of: a. public saving b. private saving c. national saving d. the equilibrium interest rate_ e. the equilibrium quantity of investment 11. Consider a production function for an economy: Y=20(L³K*N¹) Where L represents labor, K represents capital, and N represents land. In this economy, the factors of production exist in fixed supply with L-100, K-100, and N-100. a. Determine the level of output in this country_ b. Does this production function exhibit constant returns to scale?
Transcribed Image Text:10. Consider a competitive economy in which factor prices adjust to keep the factors of production fully employed, and the interest rate adjusts to keep the supply and demand for goods and services in equilibrium. We can describe this economy thru the following set of equations: Y=AK L(-a) Y=C+I+G C=C(Y-T) I=1(r) Using Up and Down arrows or a Dash for no change, show how an increase in government spending, holding other factors constant, affect the level of: a. public saving b. private saving c. national saving d. the equilibrium interest rate_ e. the equilibrium quantity of investment 11. Consider a production function for an economy: Y=20(L³K*N¹) Where L represents labor, K represents capital, and N represents land. In this economy, the factors of production exist in fixed supply with L-100, K-100, and N-100. a. Determine the level of output in this country_ b. Does this production function exhibit constant returns to scale?
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