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the money supply of the whole economy

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1. Before beginning, note that the equations had some typographical errors in them and were unclear. You should be able to follow what I am doing anyway. First of all, it is important to realize that we are assuming a closed economy. Then, Y=C+I+G+NX = C+I+ G since NX=0. Then, we may begin by solving for investment since we know the values of the other quantities. I= Y-C - G. I think something is wrong with your equations but if you correct them, I am happy to help you with this computation. Now, I= 3300 - 100r. Solving for r, gives you the interest rate while I is National Saving, which is the same as investment. National Saving is the sum of private and public saving.

We can calculate these as follows:

We introduce a new variable into the equation: (Y − T − C) + (T − G) = I .

Additional Info:
The calculation may be done as follows: I=Y-C-G. This implies that 3300 - 100r = 10,000-6000 - 1700= 2300. Then 3300r -100r = 2300. Thus -100r =-1000 and r=10. Now, we have T=1500. then (Y − T − C) + (T − G) = I .

The first of these terms is private savings and the second is public. Thus, private saving = Y-T-C = 10000 - 1500 -6000=2500. Public Savings = (T-G)= 1500 - 1700 = -200. This means that the ...

Solution Summary

Changes in the money supply of the whole economy within this case are noted.