I am at work and am sending this on my cell phone.. BEFORE MY EXAM TONIGHT, CAN ANYONE PLEASE HELP//

1. In the Country of Wiknam, the velocity of money is constant. Real GDP grows by 5 percent per year, the money stock grows by 14 percent per year, and the nominal interest rate is 11 percent. What is the real interest rate?

2. The goverment raises taxes by $100 billion. If the marginal propensity to consume is 0.6, what happens to the following? Do they rise or fall? By what amounts?

a. Public saving

b. Private saving

c. National saving

d. Investment

To answer the questions, we need to understand the concepts of velocity of money, real GDP growth rate, money stock growth rate, nominal interest rate, real interest rate, marginal propensity to consume (MPC), public saving, private saving, national saving, and investment.

1. To find the real interest rate, we can use the Fisher equation, which states that the nominal interest rate is equal to the real interest rate plus the inflation rate. Since the velocity of money is constant, we can assume that the inflation rate is equal to the growth rate of the money stock. Therefore, the nominal interest rate is 11 percent and the money stock growth rate is 14 percent. Substituting these values into the Fisher equation, we can solve for the real interest rate:

Nominal interest rate = real interest rate + inflation rate
11% = real interest rate + 14%
real interest rate = 11% - 14%
real interest rate = -3%

Therefore, the real interest rate is -3%.

2. The increase in taxes by $100 billion will affect the following:

a. Public saving: Public saving is the difference between government revenue and government expenditure. When taxes increase, government revenue increases, leading to an increase in public saving.

b. Private saving: Private saving is the difference between disposable income and consumption expenditure. When taxes increase, disposable income decreases, which reduces private saving.

c. National saving: National saving is the sum of public saving and private saving. So, an increase in taxes will lead to an overall increase in national saving.

d. Investment: Investment is funded by saving. When national saving increases, there is more money available for investment. Hence, investment will also increase.

To determine the exact amount of changes in public saving, private saving, national saving, and investment, we would need additional information such as the current levels of government revenue, government expenditure, disposable income, and consumption expenditure.