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    Please help me compile a 2-3 page analysis.
    Assume that the officials in Ecoland have compiled the following information about their economy for last year:

    Y = 10,000
    C = 6,000
    T = 1,500
    G = 1,700

    The government uses the following equation for the investment function:

    I = 3,300 â?" 100r

    Where r = equal to Ecolandâ??s real interest rate.

    Calculate, then explain, the following:

    Private saving
    Public saving
    National saving
    The equilibrium real interest rate

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    Solution Preview

    Private savings is equal to Y-T-C.
    Thus we have: 10000 - 1500 - 6000= 2500
    Public savings is equal to T-G (it is the amount by which government income exceeds government spending).
    So we have:
    1500 - 1700 = -200
    National Savings = Investment in a closed economy. Rememeber that investment is represented by "I" in the general GDP equation Y = C + I + G. So we can rearrange it and find:
    I = Y - C - G
    10000 - 6000 - 1700 = 2300
    We could also add public and private savings to find this value.

    The equilibrium interest rate can now be found by inserting this value into the equation I = 3,300 - 100r and solving for r. Thus we have:
    I = 3,300 - 100r
    100r = 3300 - 2300 = 1000
    r = 10%

    In your analysis, you will consider the changes that need to be made to improve this economy. Notice that interest ...

    Solution Summary

    Improving the economy of Ecoland