Question

The country, Hoosier (a closed economy), has the following data: GDP = 12,000, Consumption = 7,000,...

The country, Hoosier (a closed economy), has the following data: GDP = 12,000, Consumption = 7,000, Taxes = 3,000, Government purchases = 4,000. The investment is I = 4,000 – 1,000 r (where r is the real interest rate, for example r = 5%, use r = 5.)

a. What is the supply equation?

b. What is the demand equation?

c. What is the equilibrium interest rate, r, and what are national saving and investment, S and I?

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