Macroeconomics 12th Edition by Michael Parkin

Exercise 7

The table sets out the data for an economy when the government's budget is balanced.

a. Calculate the equilibrium real interest rate, investment, and private saving.
b. If planned saving increases by $0.5 trillion at each real interest rate, explain the change in the real interest rate.
c. If planned investment increases by $1 trillion at each real interest rate, explain the change in saving and the real interest rate.