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# Suppose the economy is described by the following simple model: Y = C + G C = a + bYd Yd = (1 - t)Y a. Give an expression that relates private saving...

Suppose the economy is described by the following simple model:Y = C + GC = a + b×YdYd = (1 – t)×Ya. Give an expression that relates private saving Sp to disposable income. This is called thesaving function.b. What is the relationship be between private saving and the government budget deficit?(Hint: refer back the the discussion in Chapter 2 concerning the relationship betweensaving and investment.)c. Solve for the values of Sp and the budget deficit; that is, derive an expression for eachthat is a function only of the exogenous variable G and the constants in the model. Areyour expressions consistent with your answer to Part b?

Suppose the economy is described by the following simple model:Y=C+GC = a + b×YdYd = (1 – t)×Ya. Give an expression that relates private saving Sp to disposable income. This is calledthe...