Macroeconomics
10th Edition
ISBN: 9780134896441
Author: ABEL, Andrew B., BERNANKE, Ben, CROUSHORE, Dean Darrell
Publisher: PEARSON
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Question
Chapter 4, Problem 5NP
a)
To determine
The reason behind fall in desired consumption and desired investment due to rise in real interest rate.
b)
To determine
The desired national saving for each value of the real interest rate.
c)
To determine
The value of the real interest rate, desired national saving, and desired investment when the goods market is in equilibrium. Assuming fixed output at full-employment level.
d)
To determine
The value of the real interest rate, desired national saving, and desired investment when the goods market is in equilibrium and the government purchases fall to 1600.
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Students have asked these similar questions
(b). Consider an economy described by the following equations (1
Y =C +I+G
Y = 5000; G = 1000; T = 1000; C = 250 + 0.75 (Y-T); I = 1000-50r
i) In this economy:
(1) Compute national savings
(2) Find equilibrium interest rate.
Refer to the diagrams. Other things equal, an interest rate increase will: Question 15 options: leave curve A in place but
shift curve B downward. leave curve A in place but shift curve B upward. shift curve A to the left and shift curve B
downward. shift curve A to the right and shift curve B upward
Expanded Rate of Return, r,
and Real Interest Rate, I (%)
Investment ($B)
Investment ($B)
A
Real Domestic Product,
GDP ($B)
B
The table given below shows an economy's demand for loanable funds and supply of loanable funds schedules
when the government's budget is balanced.
Real Interest rate (% per year)
Loanable fund demanded
Loanable fund supplied
(Trillian of 2002 $)
(Trillian of 2002 $)
8.5
5.5
8.0
6.0
75
6.5
7.0
7.0
6.5
7.0
9.
6.0
8.0
10
5.5
8.5
a. If the government has a budget surplus of $1 trillion, what are the real interest rate, the quantity of investment, and
the quantity of private saving? Is there any crowding out in this situation?
b. If the government has a budget deficit of $1 trillion, what are the real interest rate, the quantity of investment, and the
quantity of private saving? is there any crowding out in this situation?
c. If the government has a budget deficit of $1 trillion and the Ricardo-Barro effect occurs, what are the real interest rate
and the quantity of investment?
Chapter 4 Solutions
Macroeconomics
Ch. 4 - Prob. 1RQCh. 4 - Prob. 2RQCh. 4 - Prob. 3RQCh. 4 - Prob. 4RQCh. 4 - Prob. 5RQCh. 4 - Prob. 6RQCh. 4 - Prob. 7RQCh. 4 - Prob. 8RQCh. 4 - Prob. 9RQCh. 4 - Prob. 10RQ
Ch. 4 - Prob. 1NPCh. 4 - Prob. 2NPCh. 4 - Prob. 3NPCh. 4 - Prob. 4NPCh. 4 - Prob. 5NPCh. 4 - Prob. 6NPCh. 4 - Prob. 7NPCh. 4 - Prob. 8NPCh. 4 - Prob. 9NPCh. 4 - Prob. 1APCh. 4 - Prob. 2APCh. 4 - Prob. 3APCh. 4 - Prob. 4APCh. 4 - Prob. 5APCh. 4 - Prob. 6APCh. 4 - Prob. 7APCh. 4 - Prob. 5WWMDCh. 4 - Prob. 6WWMD
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