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?

Barry owns a 50 percent interest in b& b interests, a partnership. his brother, benny, owns a 35 percent interest in that same partnership, and the remaining 15 percent is owned by an unrelated individual. during 2016, barry sells a rental property with a basis of $60,000 to b& b interests for $100,000. the partnership intends to hold the rental as inventory for resale. what is the amount and nature of barry’s gain or loss on this transaction?