Consider an economy described as follows: Y = C + I + G. Y = 8,000. G = 2,500. T = 2,000. C = 1000 + 2/3(Y – T). I = 1,200 + 100r. In this economy, compute private saving, public saving, and national saving. Find the equilibrium interest rate. Now suppose that G is reduced by 500. Compute private saving, public saving, and national saving. Find the new equilibrium interest rate

Consider an economy described as follows: Y = C + I + G. Y = 8,000. G = 2,500. T = 2,000. C = 1000 + 2/3(Y – T). I = 1,200 + 100r. In this economy, compute private saving, public saving, and national saving. Find the equilibrium interest rate. Now suppose that G is reduced by 500. Compute private saving, public saving, and national saving. Find the new equilibrium interest rate

Economics For Today

10th Edition

ISBN:9781337613040

Author:Tucker

Publisher:Tucker

Chapter18: The Keynesian Model

Section: Chapter Questions

Problem 6SQP

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