In an economy, the desired consumption and investment functions are given by, cd = 4500 + 0.25Y-5000r jd = 3000 - 4000r where Y is output and ris the real interest rate. Government purchases, G = 2000. Determine the equation for the national saving function to show how desired national saving, S°, depends on r and Y.

In an economy, the desired consumption and investment functions are given by, cd = 4500 + 0.25Y-5000r jd = 3000 - 4000r where Y is output and ris the real interest rate. Government purchases, G = 2000. Determine the equation for the national saving function to show how desired national saving, S°, depends on r and Y.

Brief Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781337091985

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter8: Savings,investment And The Financial System

Section: Chapter Questions

Problem 4QR

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