Assume that GDP (Y) in a closed economy is 6,000. Consumption (C) is given by the equation C =...

Question:

Assume that GDP (Y) in a closed economy is 6,000. Consumption (C) is given by the equation C = 600 + 0.6(Y - T). Investment (I) is given by the equation I = 2,000 - 100r, where r is the real rate of interest in percent. Taxes (T) are 500 and government spending (G) is also 500.

a. What are the equilibrium values of C, I, and r?

b. What are the values of private saving, public saving, and national saving?

National Accounts:

National accounts entail the implementation of complete and consistent accounting techniques that measures the economic activities of an economy. The main components of national accounts include current accounts (production accounts, incomes accounts, and expenditure accounts), capital accounts, financial accounts, and balance sheet.

Answer and Explanation:

a. What are the equilibrium values of C, I, and r?

Equilibrium Consumption can be estimated by inserting the value of {eq}Y {/eq} and {eq}T {/eq}...

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National Income Accounting

from Economics 102: Macroeconomics

Chapter 10 / Lesson 8
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