a) Calculate the equilibrium real interest rate, investment, and private saving. b) If planned saving increases by
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Question:
a) Calculate the equilibrium real interest rate, investment, and private saving.
b) If planned saving increases by $0.5 billion at each real interest rate, explain the change in the real interest rate.
c) If planned investment increases by $1 billion at each real interest rate, explain the change in the real interest rate.
d) If the government’s budget becomes a deficit of $1 billion, what are the real interest rate and investment? Does crowding out occur?
e) If the government’s budget becomes a deficit of $1 billion and the Ricardo-Barro effect occurs, what are the real interest rate and the investment?
Related Book For
Macroeconomics
ISBN: 978-1464168505
5th Canadian Edition
Authors: N. Gregory Mankiw, William M. Scarth
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