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Y=C+I+G.Y=8,000.G=2,500.T=2,000.C=1,000+2/3 (Y-T).I=1,200-100 r. = C+I+G = 8,000. G = 2,500. T = 2,000. C = 1,000+2/3 (Y – T

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Answer #1

A.

Private savings = Y-C-T = 8000 - 1000 - (2/3)*(8000-2000) - 2000

Private savings = $1000

Public savings = T - G = 2000 - 2500

Public savings = -$500

National savings = Private savings + Public  savings = 1000 - 500

National savings = $500

B.

I = 1200 - 100*r

(Y - C - G) = 1200 - 100*r

8000 - 1000 - (2/3)*(8000-2000) - 2500 = 1200 - 100*r

100*r = 1200 - 500

r = 700/100

r = 7

C.

When G is reduced by $500:

Private savings = Y-C-T = 8000 - 1000 - (2/3)*(8000-2000) - 2000

Private savings = $1000

Public savings = T - G = 2000 - 2000

Public savings = 0

National savings = Private savings + Public  savings = 1000 - 0

National savings = $1000

D.

I = 1200 - 100*r

(Y - C - G) = 1200 - 100*r

8000 - 1000 - (2/3)*(8000-2000) - 2000 = 1200 - 100*r

100*r = 1200 - 1000

r = 200/100

r = 2

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Y=C+I+G.Y=8,000.G=2,500.T=2,000.C=1,000+2/3 (Y-T).I=1,200-100 r. = C+I+G = 8,000. G = 2,500. T = 2,000. C = 1,000+2/3...
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