Posted by **greg** on Saturday, October 20, 2007 at 11:44pm.

I need help with this question and am a student here. Can you PLEASE show me how to do this??

QUESTION

Consider an economy described by the following equations:

Y=C+I+G

Y=500

G=1,000

T=1,000

C=250+0.75(Y-T)

I=1,000-50r

a.In this economy, compute private saving, public saving, and national saving.

b. Find the equilibrium interest rate.

c. Now suppose that G rises to 1,250. Compute private saving, public saving,

and national saving.

d. Find the new equilibrium rate.

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