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Business, 25.04.2020 00:45 robert7248

Consider the one period, competitive equilibrium model discussed in Chapter 5. Suppose that there is a natural disaster that destroys part of the nation’s capital stock. (a) Determine the effects on aggregate output, consumption, employment, and the real wage, with reference to income and substitution effects, and explain your results. (b) Do you think that changes in the capital stock are a likely cause of business cycles?

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Consider the one period, competitive equilibrium model discussed in Chapter 5. Suppose that there is...

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