Assume that GDP (Y) is 6,500, which is also the full employment level of real GDP. Consumption (C) is given by C = 750 + 0.75(Y – T). Investment (I) is given by the equation I = 2000 – 200r, whereris the rate of interest in percent. Taxes (T) are 500 and government spending (G) is 500. The world interest rate (r*) is equal to 4 percent. Use the data above to calculate: Consumption and National Saving Assuming domestic firms can borrow or lend as much as they want at the world rate of interest, Investment = Therefore, net foreign investment = and net exports : %3D Do these numbers imply that this country is a net lender or a net debtor? Do these numbers imply that this country has a trade surplus or a trade deficit? If government uses an expansionary fiscal policy, will the national saving function shift right or left?

Assume that GDP (Y) is 6,500, which is also the full employment level of real GDP. Consumption (C) is given by C = 750 + 0.75(Y – T). Investment (I) is given by the equation I = 2000 – 200r, whereris the rate of interest in percent. Taxes (T) are 500 and government spending (G) is 500. The world interest rate (r*) is equal to 4 percent. Use the data above to calculate: Consumption and National Saving Assuming domestic firms can borrow or lend as much as they want at the world rate of interest, Investment = Therefore, net foreign investment = and net exports : %3D Do these numbers imply that this country is a net lender or a net debtor? Do these numbers imply that this country has a trade surplus or a trade deficit? If government uses an expansionary fiscal policy, will the national saving function shift right or left?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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