Business, 19.10.2019 02:10 mateotrevino1

Consider a closed economy with the following partcipants: households, rental firm, production firm and the government: (a)total production: y = 1. (b ) consumption is given by: c = 7200 − 100r where c is consumption and t is tax. (c) firm: investment i is given by equation i = 3000 − 100r. (d) government collect lump-sum tax t=2000 and spend g=3000. use the condition above to answer the following questions: (1) solve the equilibrium real interest rate r, the equilibrium consumption c and the equilibrium investment i.(2) solve the private saving and the public saving in equilibrium.(3) if the government reduces its spending from 3000 to 2000, solve the value of the consumption and investment. compare your answer with your answers to the previous questions, whether reducing government spending increases investment and consumption or not? explain narratively why reducing government spending changes the investment and consumption

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Consider a closed economy with the following partcipants: households, rental firm, production firm...

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