Assume that GDP (Y) is 5,000.

Consumption (C) is given by the equationC= 1,000 + 0.3(Y-T) -50

Investment (I) is given by the equationI= 1,500 - 50r, whereris the real interest rate, in percent.

Taxes (T) are 1,000, and government spending (G) is 1,500.

a)What are private saving,public saving, and national saving?

b)What are the equilibrium values forrandI?

c)Assume that a technological advancement increase the investment demand function toI=2,000-50r.What are the new equilibrium values for private saving, public saving, and national saving?

d)Using the new investment demand function what are the new equilibrium values forrandI?