equations: Y=C+I+G Y=5000 C= 200+0.75 (Y-T) I= 1250-25r T= 1000 G= 800 Suppose Zambia is a...
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equations: Y=C+I+G Y=5000 C= 200+0.75 (Y-T) I= 1250-25r T= 1000 G= 800 Suppose Zambia is a closed economy in the Long run described by the following Where Y is national output/income, C is consumption, I is investment, r is interest rate, G is government spending and T is taxes. (a) Solve for private saving, public saving and national saving. (2 marks) (b) Solve for the equilibrium interest rate, and the level of investment (2 marks) (c) Plot the equilibrium condition: Savings-investment (1 marks) (d) Now suppose taxes are reduced to 875: (i) marks) Calculate the new level of public savings, private savings, national savings, interest rate and investment. (2 marks) Explain in few words the effect of this policy on savings, investment and interest rate. (2 marks) (ii)Graph the new equilibrium (together with the old) for the economy due to the fiscal policy (1 equations: Y=C+I+G Y=5000 C= 200+0.75 (Y-T) I= 1250-25r T= 1000 G= 800 Suppose Zambia is a closed economy in the Long run described by the following Where Y is national output/income, C is consumption, I is investment, r is interest rate, G is government spending and T is taxes. (a) Solve for private saving, public saving and national saving. (2 marks) (b) Solve for the equilibrium interest rate, and the level of investment (2 marks) (c) Plot the equilibrium condition: Savings-investment (1 marks) (d) Now suppose taxes are reduced to 875: (i) marks) Calculate the new level of public savings, private savings, national savings, interest rate and investment. (2 marks) Explain in few words the effect of this policy on savings, investment and interest rate. (2 marks) (ii)Graph the new equilibrium (together with the old) for the economy due to the fiscal policy (1
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a Given Y 5000 C 200 075Y T I 1250 25r T 1000 G 800 We can solve for private saving public saving and national saving as follows Private saving Sp Y T ... View the full answer
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