Chapter 8

Question 1

Aggregated Supply

Answer 1

Y = F(K,L)

Question 2

Aggregated Demand

Answer 2

C(Y-T) + I(r) + G

Question 3

Equilibrium Goods Market

Answer 3

Y = C(Y-T) + I(r) + G

The real interest rate adjusts to equate demand with supply.

Question 4

Loanable Fund Market

Answer 4

Supply of Funds = Saving
Demand for Funds = Investment
Price of Funds = Real Interest Rate

Question 5

Types of Saving

Answer 5

1. Private Saving
2. Public Saving
3. National Saving

Question 6

Private Saving

Answer 6

(Y-T)-C

Question 7

Public Saving

Answer 7

T-G

Question 8

National Saving (S)

Answer 8

Y-C-G