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Q. Consider an economy described by the following equations:Y = 10K.3L.7(round Y to the nearest 1000)C = 250 + 0.75(Y-T)I = 1000 - 50rG = 1000T = 1000K = 500L = 500a. Compute private saving, public saving, and national saving.b. Compute total labor income and total capital income.c. Find the equilibrium interest rate.d. Scenario 1: Suppose the government increases G to 1250. Compute private saving, public saving, and national saving and the new equilibrium interest rate.e. Scenario 2: Set G back to 1000. Suppose the labor force doubles to L = 1000. Compute private saving, public saving, and national saving. Compute total labor income and total capital income. Find the equilibrium interest rate.
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