# 3) Consider a closed economy described by the following equations 5000 G 1000 = 1 000 C- 100+0.75…

closed economy described by the following equations 5000 G 1000 = 1 000 C- 100+0.75(Y – T) ?-1000-10r where Y is total income (GDP), G is the government expenditure, T are the taxes, C is aggregate consumption that depends on disposable income (Y-T) and I is the investment function that we assume to be negatively related with the interest rate (r). a) From this economy, calculate private, public and national saving; b) Use the income expenditure identity to calculate the equilibrium interest rate; c) Now suppose that G increases to 1500, everything else constant. Calculate the private, public and national saving in this case; d) Find the new equilibrium interest rate. Comment your result; ” src=”https://files.transtutors.com/cdn/questions/transtutors006/images/transtutors006_3770ec51-237b-42fc-8de5-19ace3b5d111.png”>

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3) Consider a closed economy described by the following equations 5000 G 1000 = 1 000 C- 100+0.75…
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3) Consider a closed economy described by the following equations 5000 G 1000 = 1 000 C- 100+0.75(Y – T) ?-1000-10r where Y is total income (GDP), G is the government expenditure, T are the taxes, C is aggregate consumption that depends on disposable income (Y-T) and I is the investment function that we assume to be negatively related with the interest rate (r). a) From this economy, calculate private, public and national saving; b) Use the income expenditure identity to calculate the equilibrium interest rate; c) Now suppose that G increases to 1500, everything else constant. Calculate the private, public and national saving in this case; d) Find the new equilibrium interest rate. Comment your result;