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Consider a closed economy

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Reference no: EM131868543

Consider a closed economy described as follows:

Y = C + I + G

Y = 8000

G = 2500

T = 2000

C = 1000 + 2/3*( Y - T )

I = 1200 - 100*r

Compute the following:

a. Private saving

b. Public saving 

c. National saving 

d. Equilibrium interest rate 

e. If government spending increases to 2800, how does this affect the equilibrium interest rate?

Reference no: EM131868543

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