- Problem 2 Box 1 The Economy Is Described By The Following Equations Y C I G No Trade Y 5000 G 1000 T 1000 C 1 (40.29 KiB) Viewed 13 times
Problem 3 Consider the economy described by Box 1. In equilibrium, total savings (that is, the sum of public and private savings) equal: a) 250 b) 500 c) 750 d) 1000 e) 5000 f) None of the above
Problem 4 Consider the economy described in Box 1. Suppose G rises to 1,250. Then total savings and the interest rate are a) S = 500 and r = 5 b) S = 750 and r = 5 1000 and r = 5 c) S d) S = 500 and r = 10 e) S = 750 and r = 10 f) S = 1000 and r = 10 None of the above g)
Problem 5 Consider the economy described in Box 1. Consider also a "balanced budget" increase in G and T (in other words, G and T both rise by the same amount). Each increase of 1 unit in G and T will a) increase r by .005 b) increaser by .015 c) decrease r by .005 d) increase r by .015 e) None of the above