The fictional country of Gallia has collected GDP data for its current business year. Its economy...

  

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The fictional country of Gallia has collected GDP data for its current business year. Its economy is closed, i.e., NX= 0, and the government is currently running a budget surplus. Gallia's economists have identified i the following information: Y=335,000.00 C=201,000.00 T= 30,150.00 G= 56,950.00 Furthermore, its investment (1) can be described using the following function: I= 110, 550.00 3,350.00 x freats where freal denotes Gallia's real interest rate. We further assume that the real interest rate can be interpreted as a percentage value. [Note that you are expected to show your work. Partial credit will be awarded for incomplete answers.] Given the information above, 1. find private saving, public saving, investment, and national saving. 2. findThat is, the equilibrium real interest rate at which Qs = QD- 3. what happens to Gallia's saving and investment as real drops by 5 percentage-points? What is the effect on the equilibrium market quantity (Q) of loanable funds and why does it make sense? [Hint: You are not required to show mathematical proof.] The fictional country of Gallia has collected GDP data for its current business year. Its economy is closed, i.e., NX= 0, and the government is currently running a budget surplus. Gallia's economists have identified i the following information: Y=335,000.00 C=201,000.00 T= 30,150.00 G= 56,950.00 Furthermore, its investment (1) can be described using the following function: I= 110, 550.00 3,350.00 x freats where freal denotes Gallia's real interest rate. We further assume that the real interest rate can be interpreted as a percentage value. [Note that you are expected to show your work. Partial credit will be awarded for incomplete answers.] Given the information above, 1. find private saving, public saving, investment, and national saving. 2. findThat is, the equilibrium real interest rate at which Qs = QD- 3. what happens to Gallia's saving and investment as real drops by 5 percentage-points? What is the effect on the equilibrium market quantity (Q) of loanable funds and why does it make sense? [Hint: You are not required to show mathematical proof.]

Answer rating: 100% (QA)

1 Private saving S Y C T 33500000 20100000 3015000 10385000 Public saving T G 3015000 5695000 268000... View the full answer