Question: X SavingInvestmen... 100% B 1 / 1 TT . . . Savings/Investment In Class GDP = 10 Consumption = 7 Government Spending = 2 Private

X SavingInvestmen... 100% B 1 / 1 TT . . . Savings/Investment In Class GDP = 10 Consumption = 7 Government Spending = 2 Private Savings = 1 Transfer Payments = 1 A) Calculate Taxes, Investment, Public Savings and National Savings B) Draw the graph of the market for loanable funds, assuming the equilibrium interest rate i* = 3% Make sure to label the axis and equilibrium points C) If G increases so that now G = 2.5, recalculate Public Savings, National Savings and Investment. (assume that any other variables stay the same) D) Show the change on your graph. What happens to i* and Q*? E) Use a production function to show the affects of the change from A to C and explain the impact on long run growth. M 51 Apr 16 8:40 A 5 US 0

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