Assume That GDP (Y) Is 5,000 $C , l$ , And $r$

question 145

Essay

Assume that GDP (Y) is 5,000. Consumption (C). is given by the equation C = 1,200 + 0.3(Y - T) - 50r, where r is the real interest rate. Investment (I) is given by the equation I = 1,500 - 50r. Taxes (T) are 1,000 and government spending (G) is 1,500. a. What are the equilibrium values of $C , l$ , and $r$ ?
b. What are the values of private saving, public saving, and national saving?
c. Now assume there is a technological innovation that makes business want to invest more. It raises the investment equation to $I = 2,000 - 50 r$ . What are the new equilibrium values of $C$ , $I$ , and $r$ ?
d. What are the new values of private saving, public saving, and national saving?

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Definitions:

Psychodynamic Perspective

An approach in psychology that emphasizes the systematic study of the psychological forces that underlie human behavior, feelings, and emotions and how they might relate to early experience.

Unconscious Hatred

Deep-seated feelings of animosity or despise that a person is not fully aware of or does not acknowledge.

Behavior

Actions or reactions of an organism or system, usually in response to stimuli.

Biopsychosocial Approach

An integrated approach that incorporates biological, psychological, and social-cultural levels of analysis.