1. Xanadu's desired national saving can be expressed as:O. Sd = 20 + 200rO. Sd = 10 + 200rO. Sd = 10 + 100rO. Sd = 15 + 200r2. Xanadu's desired investment can be expressed asO. Id = 20 – 100r O. Id = 32 – 200rO. Id = 75 – 200rO. Id = 30 – 200r Consider an economy called Xanadu for which desired aggregate consumptiondepends on income, Y , and the real interest rate, r', according toCª = 100 + 0.7Y – 200r.%3DXanadu's GDP is Y = 1000and government spending on goods and services isG == 180. Xanadu's desired future capital stock is given byK* = 140 – 100ucwhere ucdenotes the user-cost of capital. The price of capital is PK = 2, thephysical depreciation rate isd = 0. 1and the existing capital stock isKo = 50.Tevolves according to%3Dapital stock between any period t and the following period t+1K+1 = I; + (1 – d)K,wherel is the level of investment. Assume throughout that net factor paymentsfrom abroad (NFP) is equal to zero.

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1. Xanadu's desired national saving can be expressed as: O. Sd = 20 + 200r O. Sd = 10 + 200r O. Sd = 10 + 100r O. Sd = 15 + 200r

Macroeconomics: Principles and Policy (MindTap Course List)

13th Edition

ISBN:9781305280601

Author:William J. Baumol, Alan S. Blinder

Publisher:William J. Baumol, Alan S. Blinder

Chapter8: Aggregate Demand And The Powerful Consumer

Section: Chapter Questions

Problem 8DQ

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