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Q-1: Assume that an economy is characterized by the following equations:
Y= C + I + G
Y(GDP) = 6000
C = 600 + 0.6 (Y - T)
I = 2000 - 100r
T = 500
G = 500,
where r is the real rate of interest in percent, T is tax and G is a government spending.
a. What are the equilibrium values of C, I, and r ?
b. What are the values of private saving, public saving, and national saving? If government spending rises to 1000, what are the new equilibrium?
c. values of C, I, r, private saving, public saving, and national saving?
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