3. Suppose, GDP = $24 trillion, C = $15 trillion, G = $6 trillion, and Budget deficit = $1.2 trillion. The economists also estimate that the investment function is: I=3.6-0.1r Where r is the country's real interest rate, expressed as a percentage. a) Find public saving, net taxes, private saving, national saving, investment, and equilibrium interest rate. b) Government cuts taxes by $600 billion. Find new budget deficit and answers to A. if: i) Consumers save the entire tax cut ii) Consumers save 1/4 and spend the other 3/4 of the tax cut
3. Suppose, GDP = $24 trillion, C = $15 trillion, G = $6 trillion, and Budget deficit = $1.2 trillion. The economists also estimate that the investment function is: I=3.6-0.1r Where r is the country's real interest rate, expressed as a percentage. a) Find public saving, net taxes, private saving, national saving, investment, and equilibrium interest rate. b) Government cuts taxes by $600 billion. Find new budget deficit and answers to A. if: i) Consumers save the entire tax cut ii) Consumers save 1/4 and spend the other 3/4 of the tax cut
Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter18: Savings,investment And The Financial System
Section: Chapter Questions
Problem 5PA
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