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homework4spring2007

homework4spring2007 - Economics 102 Homework#4 Spring 2007...

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Economics 102 Homework #4 Spring 2007 Due 03/27/2007 in lecture Directions: The homework will be collected in a box before the lecture. Please place your name , TA name and section number on top of the homework (legibly). Make sure you write your name as it appears on your ID so that you can receive the correct grade. Please remember the section number for the section you are registered in, because you will need that number when you submit exams and homework. Late homework will not be accepted so make plans ahead of time. Good luck! 1. Consider the following economy. The business sector has an investment function: r = 10 – I/4000 The household sector has a saving function: r = -5 + S p /1000 I is the level of investment, r is the interest rate in percentage terms and S P is the level of private saving. a) Write an equation expressing GDP, or Y, for this economy. Assume this is an open economy and that there are four sectors that demand goods and services in this economy. Then, solve this equation for investment. (Hint: at this point you are not using any numbers; you are only using symbols.)

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homework4spring2007 - Economics 102 Homework#4 Spring 2007...

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