# Spending calculations

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 Ã¢Ã¢?Â¬" 100r

Where r = equal to Ecoland's real interest rate.

Calculate, then explain, the following:

Private saving

Public saving

National saving

Investment

The equilibrium real interest rate

https://brainmass.com/economics/investments/spending-calculations-447439

#### Solution Preview

1) Private Saving

Private saving is the total amount of individuals (i.e. the citizens) save. Obviously, saving is what you earn take away taxes and take away what you spend. So it should be Private saving = disposable income - consumption. Disposable income is the amount of money available to you to spend, this is income minus taxes. You are able to spend either parts of all of your disposable income (and in some cases, you are able to spend more).

Disposable income = income - tax = Y - T = 10,000 - 1,500 = 8,500

Private saving = 8,500 - 6,000 = 2,500

2) Public ...

#### Solution Summary

Spending calculations