Assume That GDP (Y) Is 6,000

question 130

Essay

Assume that GDP (Y) 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?
c.If government spending rises to 1,000, what are the new equilibrium values of
C, I, and r?
d.What are the new equilibrium values of private saving, public saving, and national saving?

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Definitions:

Religious Warfare

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Thirty Years' War

A protracted, multifaceted conflict in Central Europe that took place between 1618 and 1648, involving most of the major European powers of the time and marked by significant casualties and territorial changes.

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A 1555 treaty between Charles V, Holy Roman Emperor, and the Schmalkaldic League that allowed the princes of the Holy Roman Empire to choose either Catholicism or Lutheranism as their territory's official religion.

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