[ECON 3900] - Midterm Exam Guide - Comprehensive Notes for the exam (20 pages long!)
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T=t=100: solve for the level of consumption b. If, s=i, solve for the initial equilibrium values of s and i: solve for the equilibrium interest rate, consider an economy described by the following equations: In this economy, compute private savings, public saving, and national saving: find the equilibrium interest rate, no suppose that g rises to 1,250. Compute private saving, public savings and national savings: find the new equilibrium interest rate, assume that gdp (y) is 5,000. Consumption (c) is given by the equation c = 1,000 + Investment (i) is given by the equation i = 1,500 - 50r, where r is the real interest rate in percent. It raises the investment equation to i = 2,000 - 50r. Suppose a government moves to reduce a budget deficit. Using the long-run model of the economy developed in chapter 3, graphically illustrate the impact of reducing a government"s budget deficit by reducing government purchases.
