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Home / Questions / Assume that GDP Y is 5000 Consumption is C1000 3Y-T Investment is I1500 50r where r is the...

Assume that GDP Y is 5000 Consumption is C1000 3Y-T Investment is I1500 50r where r is the real interest rate Taxes

Assume that GDP (Y) is 5,000 Consumption is
C=1,000+3(Y-T) Investment is I=1500-50r, where r is the real interest rate
Taxes (T) are 1,000 and government expenditures (G) are 1,500

 

a) Calculate the equilibrium values of C, I, and r

b) Calculate the equilibrium values of private saving,
government saving, and total saving

c) Now suppose that there is a technological innovation
that makes businesses want to invest more, so that the new investment function
is I=2,000-50r Calculate the new equilibrium values of C, I, and r

 

d) Calculate the new equilibrium values of private saving,
government saving, and total saving

Apr 29 2020 View more View Less

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