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Unformatted text preview: C,I and G ? d) Repeat parts b) and c) for Jane and Sally. e) In the aggregate equation C + S + T = C + I + G , what are the values of all the variables? 2. Suppose the demand for consumption falls. What happens to the interest rate? What happens to the quantity of investment? Use a graph to illustrate your answers. 3. Suppose the demand for investment falls. What happens to the interest rate? What happens to the quantity of consumption? Use a graph to illustrate your answers. 4. Suppose government spending is reduced. What happens to the interest rate? What happens to the quantity of consumption? What happens to the quantity of investment? Use a graph to illustrate your answers....
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This note was uploaded on 06/09/2008 for the course ECO 108 taught by Professor Landburg during the Fall '06 term at Rochester.
 Fall '06
 Landburg
 Economics

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