chapter 8 hw

chapter 8 hw - b. Investment remains the same because this...

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Colleen Clancy Macroeconomics Chapter 8 Homework 6. Private Saving = GDP - taxes - consumption $0.5 trillion = $8 trillion - $1.5 trillion - consumption Consumption = $6 trillion Public Saving = Taxes - government purchases $0.2 trillion = $1.5 trillion - government purchases Government purchases = $1.3 trillion GDP = consumption + investment + government purchases $8 trillion = $6 trillion + investment + $1.3 trillion Investment = $0.7 trillion National Saving = GDP - consumption - government purchases National Savings = $8 trillion - $6 trillion - $1.3 trillion National Savings = $0.7 trillion 8. a. The interest rate rises when the government takes out more loans.
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Unformatted text preview: b. Investment remains the same because this change does not influence the amount of loans consumers desire to borrow at the changing interest rate. Public Saving would become negative and thus reduce national savings. Private Savings would not be influenced. c. The supply would decrease by shifting to the left, resulting in higher interest rates. d. The demand of loanable funds will decrease due to the rise in interest rates. e. People will want to save more which would increase the supply of loanable funds....
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This note was uploaded on 04/08/2008 for the course ECON 1002 taught by Professor Rissell during the Spring '08 term at Villanova.

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