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December 19, 2014

Homework Help: econ--HELP!!

Posted by greg on Sunday, October 21, 2007 at 5:35pm.

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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