Okay. So now the recording has started. So first of all, we're going to be solving a

text-based task. I mean, it is nice that you have solved all of these tasks beforehand,

and then it's just a matter of sort of discussing and comparing. Yeah. And if you have done

so, then feel free to ask questions and say how you solved it. And we can, yeah, gladly

discuss on this. So regarding the end, yeah. Oh, I just wanted to try and solve it. That's

the right. Sorry. I just wanted to try and solve the task, if that's all right, or I

didn't want to interrupt you. Oh yeah, you can solve it. Okay. So I'm not sure if I did

it correctly, but what I did was I was looking at the equilibrium in the closed economy and

then looking at how I can compute the savings. So meaning savings equals income minus income

equals consumption minus government spending. And I was just plugging in the values we got.

So we got everything we needed. And then my result was 700. Yeah, that sounds good. That's

great. I will solve it in the camera. So. Okay. And then I just looked again at the

equilibrium where savings equals investment. And then again, we had after computing the

savings, all the information we needed. And then I computed the interest rate. I mean,

cool. So I will just start solving it and then you can just compare on your own if you

have any, any questions and feel free to ask. So for this, let me get my notes. One minute.

All right. So in this task, it is about a close economy, which is described by equilibrium

income equals 7,000 and a consumption function, which is 300 plus 0.8 times disposable income

and an investment function of this type. And important here is taxes in the balance government

budget are T equal to 2000. So the fact that this word balance is here means that you can

actually assume that T is equal to G, which is very convenient because you want to then

calculate savings, et cetera. So let me switch to the camera and we can start solving this.

Okay. So this is the text based task.

Of summer semester 2013 task two. And here you have given that we're talking about a

close economy where net exports are equal to zero and then output equals 7,000. You

get this consumption function. You get investment and you get balance budget, meaning that T

is equal to G and this is equal to 2000. Right? So this comes from the balance budget.

All right. So the first thing you've got to do is you need to calculate aggregate saving

and define verbally and algebraically the equilibrium in the financial market. So here

you should note that we, as we have previously talked about, you need to define it verbally

and algebraically. So what I would do is, well, first calculate aggregate savings. And

for this, you can use the fact that aggregate savings, when there is a balanced budget,

they are defined as Y minus C, which is in itself a function of disposable income and

G. Right? So it's basically the part of output, which is not used for consumption nor for

government expenditure. I hope you can see me. It's a weird angle. So you can actually

just start plugging in values. So you know Y is 7,000 and the consumption function, you

may plug it in. So it is 300 minus 0.8 times Y minus T. So we know Y is 7,000 and T is

2,000. And then you would just need to subtract 2,000 again because of G. Now you can plug

this into your calculator and you would get that national savings are equal to 700. Okay?

And now that you have defined or calculated aggregate savings, you may go for the verbal

definition of the financial market equilibrium. So the verbal definition would be that in

the financial market equilibrium, investment and savings are equal. Meaning that in the

financial market equilibrium, the real interest rate adjusts such that investment and savings

are equal. Right? So if you write this algebraically, this means that savings, they should be equal

to the amount of investment in the economy at the equilibrium real interest rate. And

now what we want to do is we want to solve for the equilibrium real interest rate. So

we basically have to plug in the value that we calculated for savings and say this is

equal to the investment function that is given. And then you can basically solve for the real

interest rate in equilibrium. And this is basically 1,500 minus 700. And then if you

bring the 8,000 to the left hand side, you would need to divide by 8,000 again. So this