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me. 6. Consider a closed economy with a gross domestic product (Y) of 800, consumption expenditure (C) of 500, governmen
Posted: Wed Jul 06, 2022 5:54 am
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- Me 6 Consider A Closed Economy With A Gross Domestic Product Y Of 800 Consumption Expenditure C Of 500 Governmen 1 (53.19 KiB) Viewed 19 times
me. 6. Consider a closed economy with a gross domestic product (Y) of 800, consumption expenditure (C) of 500, government expenditure (G) of 100 and tax revenues (T) of 190. The figures are in billions of dollars. Suppose the investment expenditure function is I = 300-50r, where r is the real interest rate expressed as a percentage. (Total marks = 12) a) State the equation between Y and the three components of expenditure. (2 marks) b) Calculate private saving (Sp), public saving (Sg), and national saving (S). (2 marks) c) Calculate investment (I). (2 marks) d) Calculate the equilibrium real interest rate and quantity of loanable funds. (3 marks) e) If the government ran a budget deficit of $30 billion in the next period, explain how this would affect the market for loanable funds. (3 marks) FCON 218