Okay here is my question. Prepare a two- to three-page analysis by answering the

Question

Okay here is my question.

Prepare a two- to three-page analysis by answering the questions below. Be sure to cite your references using APA format.

Assume that the officials in Ecoland have compiled the following information about their economy for last year:

Y = 10,000
C = 6,000
T = 1,500
G = 1,700

The government uses the following equation for the investment function:

I = 3,300 – 100r

Where r = equal to Ecoland’s real interest rate.

Calculate, then explain, the following:

Private saving
Public saving
National saving
Investment
The equilibrium real interest rate

My question is what is Y, C, T, and G? Then why is I = 3,300 - 100r and what does that have to do with the problem.

Explanation / Answer

Private savings is calculated by Y-T-C so 10000 - 1500 - 6000= 2500 Public savings is calculated by T-G so 1500 - 1700 = -200 sopublic savings is negative National savings is Investments so with the equation Y = C + I+ G you can rearrange it so that I = Y - C - G so 10000 - 6000 - 1700 = 2300 Investment is national savings so 2300 The equilibrium real interest rate can be solved by setting I= 2300 in the equation I = 3300 - 100r so 2300 = 3300 - 100r 100r + 2300 = 3300 100r = 3300 -2300 100r = 1000 r = 1000/100 r = 10 so 10% real interest rate

Related Questions

Navigate

• Browse (All)
• Browse O
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.