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

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

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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