Principles of Economics, 7th Edition

Published by South-Western College
ISBN 10: 128516587X
ISBN 13: 978-1-28516-587-5

Chapter 26 - Part IX - Saving, Investment, and the Financial System - Problems and Applications - Page 568: 5

Answer

Private saving is 2500 Public saving is -200 National saving is 2300 Investment is 2300 Equilibrium interest rate is 10%

Work Step by Step

$ Y = C + I + G + NX$ $T = 1500$ Closed economies have no exports $ Y = C + I + G + NX$ $ Y = C + I + G $ $ 10000 = 6000 + 3300 - 100*r + 1700$ $10000 = 9300 -100r +1700$ $10000 = 11000 - 100r$ $-1000 = -100r$ $-1000/-100 = -100r/-100$ $10 = r$ $I = 3300-100*r$ $I = 3300-100*10$ $I = 3300-1000$ $I = 2300$ Private saving $Y - T - C$ $10000 - T - 6000$ $4000 - 1500$ $2500$ Public saving $T - G$ $T - 1700$ $1500 - 1700$ $-200$ Saving = investment $S = I$ $S = 2300$
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