An economy has government purchases of 1000 desired

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Mathematics: A Practical Odyssey
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Chapter 5 / Exercise 8
Mathematics: A Practical Odyssey
Johnson/Mowry
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46.An economy has government purchases of 1000. Desired national saving and desired investment aregiven bySd=200 +5000r+0.10Y– 0.20Id=1000 – 4000rWhen the full-employment level of output equals 5000, then the real interest rate that clears thegoods market will beG(a) 1.11%.(b) 5.56%.(c) 16.67%.(d) 21.11%.Answer: B
Level of difficulty: 3Section: 4.347.Any change in the economy that raises desired national saving for a given value of the real interestrate will shift the desired national saving curve to
Level of difficulty: 1Section: 4.3
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Mathematics: A Practical Odyssey
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Chapter 5 / Exercise 8
Mathematics: A Practical Odyssey
Johnson/Mowry
Expert Verified
Chapter 4Consumption, Saving, and Investment6148.An increase in the expected real interest rate tends to
Level of difficulty: 1Section: 4.349.The saving-investment diagram shows that a higher real interest rate due to a leftward shift of thesaving curve
Level of difficulty: 2Section: 4.350.A temporary decrease in government purchases would cause(a) a rightward shift in the saving curve and a leftward shift in the investment curve.(b) a rightward shift in the saving curve and a rightward shift in the investment curve.(c) a rightward shift in the saving curve, but no shift in the investment curve.(d) no shift in the saving curve, but a leftward shift in the investment curve.Answer: C
Level of difficulty: 2Section: 4.351.If consumers foresee future taxes completely, a reduction in taxes this year that is accompanied byan offsetting increase in future taxes would cause
Level of difficulty: 2Section: 4.3

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