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4. (30 points) Consider an economy described as follows: Y=C+I+G Y=9,000 G=2,000 T=1,000 C=2000+1/2(Y-T) I=1,600-100r a) In this economy.compute private saving, public saving, and national saving. b) Find the equilibrium interest rate. c) Now suppose that G is increased by 100. Compute private saving public saving, and national saving. d) Find the new equilibrium interest rate.

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4. (30 points) Consider an economy described as follows:
Y=C+I+G
Y=9,000
G=2,000
T=1,000
C=2000+1/2(Y-T)
I=1,600-100r
a) In this economy.compute private saving, public saving, and national saving.
b) Find the equilibrium interest rate.
c) Now suppose that G is increased by 100. Compute private saving public saving, and
national saving.
d) Find the new equilibrium interest rate.

4. (30 points) Consider an economy described as follows: Y=C+I+G Y=9,000 G=2,000 T=1,000 C=2000+1/2(Y-T) I=1,600-100r a) In this economy.compute private saving, public saving, and national saving. b) Find the equilibrium interest rate. c) Now suppose that G is increased by 100. Compute private saving public saving, and national saving. d) Find the new equilibrium interest rate.

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Elit · 8 yıl öğretmeni
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a) To compute private saving, public saving, and national saving, we first need to find the equilibrium level of output (Y) using the given equations.

Given:
Y = 9,000
G = 2,000
T = 1,000
C = 2,000 + 1/2(Y - T)
I = 1,600 - 100r

We can substitute the given values into the consumption function to find C:
C = 2,000 + 1/2(9,000 - 1,000) = 5,000

Now, we can find the equilibrium level of output (Y) by setting the total output (Y) equal to the sum of consumption (C), investment (I), and government spending (G):
Y = C + I + G
9,000 = 5,000 + (1,600 - 100r) + 2,000
9,000 = 8,600 - 100r
100r = 600
r = 6

Now that we have the equilibrium interest rate (r), we can compute private saving, public saving, and national saving.

Private saving = Disposable income - Consumption
Private saving = (Y - T) - C
Private saving = (9,000 - 1,000) - 5,000 = 3,000

Public saving = T - G
Public saving = 1,000 - 2,000 = -1,000

National saving = Private saving + Public saving
National saving = 3,000 - 1,000 = 2,000

b) The equilibrium interest rate is 6.

c) Now suppose that G is increased by 100. We need to compute private saving, public saving, and national saving.

Given:
Y = 9,000
G = 2,100
T = 1,000
C = 2,000 + 1/2(Y - T)
I = 1,600 - 100r

Substituting the given values into the consumption function:
C = 2,000 + 1/2(9,000 - 1,000) = 5,000

Now, we can find the new equilibrium level of output (Y) by setting the total output (Y) equal to the sum of consumption (C), investment (I), and government spending (G):
Y = C + I + G
9,000 = 5,000 + (1,600 - 100r) + 2,100
9,000 = 7,800 - 100r
100r = 200
r = 2

Now that we have the new equilibrium interest rate (r), we can compute private saving, public saving, and national saving.

Private saving = Disposable income - Consumption
Private saving = (Y - T) - C
Private saving = (9,000 - 1,000) - 5,000 = 3,000

Public saving = T - G
Public saving = 1,000 - 2,100 = -1,100

National saving = Private saving + Public saving
National saving = 3,000 - 1,100 = 1,900

d) The new equilibrium interest rate is 2.
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