(SOLVED) Suppose that a country experiences destruction

of part of its
Suppose that a country experiences destruction of part of its Suppose that a country
experiences destruction of part of its capital stock. Suppose also that the capital stock plays a
role as collateral in credit contracts, so that the destruction of capital increases credit market
frictions.(a) Determine how the net […]

There is a temporary increase in the relative price of There is a temporary increase in the
relative price of energy. Determine how the response of current aggregate output to this shock
depends on the marginal propensity to consume, and explain carefully why you get this result.
There is a […]

Suppose that z increases and that K increases at the Suppose that z’ increases and that K
increases at the same time. Show that it is possible for the real interest rate to remain constant
as a result. What does this say about the model’s ability to explain the differences […]

Suppose that there is a permanent increase in total factor Suppose that there is a permanent
increase in total factor productivity. Determine the implications of this for current
macroeconomic variables, and show how the impact differs from the case where total factor
productivity is expected to increase only temporarily. Explain […]

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Suppose that there is a shift in the representative consumer s Suppose that there is a shift in
the representative consumer’s preferences. Namely, the consumer prefers, given the market
real interest rate, to consume less current leisure and more current consumption goods.(a)
Determine the effects of this on current aggregate […]

Determine how the following affect the slope of the output Determine how the following affect
the slope of the output supply curve, and explain your results:(a) The marginal product of labor
decreases at a faster rate as the quantity of labor used in production increases.(b) The
intertemporal substitution effect of […]

Determine how the following affects the slope of the output Determine how the following affects
the slope of the output demand curve, and explain your results:(a) The marginal propensity to
consume increases.(b) The intertemporal substitution effect of the real interest rate on current
consumption increases.(c) The demand for investment goods […]

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