Consider a closed economy described as follows:
Y = C + I + G
Y = 8000
G = 2500
T = 2000
C = 1000 + 2/3*( Y - T )
I = 1200 - 100*r
Compute the following:
a. Private saving
b. Public saving
c. National saving
d. Equilibrium interest rate
e. If government spending increases to 2800, how does this affect the equilibrium interest rate?