Compute private saving-public saving and national saving

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Reference no: EM13237023

Consider an economy described by the following equations:
Y = C + I + G
Y = 5,000
G = 1,000
T = 1,000
C = 250 + 0.75( Y - T)
I = 1,000 - 50 r

a) In this economy, compute private saving, public saving, and national saving

b) Find the equilibrium interest rate.

c) Now suppose that G rises to 1,250. Compute private saving, public saving, and national saving.

d) Find the new equilibrium interest rate.

Reference no: EM13237023

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