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Consider an economy described as follows:
Y = C + I + G.
Y = 5,000.
G = 1,000.
T = 1,000.
C = 250 + 0.75(Y T).
I = 1,000 – 50 r.

In this economy, compute private saving, public saving, and national saving.

Private Saving =

Public Saving =

National Saving =

Review Section 3-4 for a discussion of the determinants of saving in the long-run model.
Review Section 3-4 for a discussion of the determinants of saving in the long-run model.
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      Consider an economy described as follows:
      Y = C + I + G.
      Y = 5,000.
      G = 1,000.
      T = 1,000.
      C = 250 + 0.75(YT).
      I = 1,000 – 50 r.

      Find the equilibrium interest rate.

      The equilibrium interest rate is equal to .

      Review Section 3-4 and Figure 3-7 for discussion of how the equilibrium interest rate is determined in the long-run model.
      Review Section 3-4 and Figure 3-7 for discussion of how the equilibrium interest rate is determined in the long-run model.
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          Consider an economy described as follows:
          Y = C + I + G.
          Y = 5,000.
          G = 1,000.
          T = 1,000.
          C = 250 + 0.75(YT).
          I = 1,000 – 50 r.

          Now suppose that G rises to 1,250. Compute private saving, public saving, and national saving.

          Private Saving =

          Public Saving =

          National Saving =

          Review Section 3-4 for a discussion of the determinants of saving in the long-run model.
          Review Section 3-4 for a discussion of the determinants of saving in the long-run model.
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              Consider an economy described as follows:
              Y = C + I + G.
              Y = 5,000.
              G = 1,000.
              T = 1,000.
              C = 250 + 0.75(YT).
              I = 1,000 – 50 r.

              Now suppose that G rises to 1,250. Find the new equilibrium interest rate.

              The equilibrium interest rate is equal to .

              Review Section 3-4 and Figure 3-9 for discussion of how the equilibrium interest rate changes when public saving changes.
              Review Section 3-4 and Figure 3-9 for discussion of how the equilibrium interest rate changes when public saving changes.
              WIO_Mankiw_Chapter03_Question10_04
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