Consider an economy described as follows: a. In this economy, compute private saving, public saving, and national
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Consider an economy described as follows:
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.
Transcribed Image Text:
Y=C+I+ G. Y = 8,000. G = 2,500. T = 2,000. C = 1000 + 2/3(Y-T). I= 1,200 100r.
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