What are the values of private saving-public saving

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Assume that GDP (Y) is 3,000. Consumption (C) is given by the equation C = 1,200 + 0.3(Y – T) – 100 r, where r is the real interest rate. Investment (I) is given by the equation I = 1,500 – 50r. Taxes (T) are 2,000 and there is no government spending (G). a. What are the equilibrium values of C, I, and r? b. What are the values of private saving, public saving, and national saving? c. Now assume there is a technological innovation that makes business want to invest more. It raises the investment equation to I = 2,500 – 50r. What are the new equilibrium values of C, I, and r? d) If Tax rises by 5000, what are the equilibrium values of C, I, and r? e). What are the new values of private saving, public saving, and national saving? (Hint: Y=C+I+G, Solve for equilibrium r )

Reference no: EM131387207

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