Question

ating o as g 4. Suppose that the representative consumer's preference change, in that his or her rate of substitution of leisure for consumption increases for any quantities of consumpon and leisure a. Explain what this change in preferences means in more intuitive language b. What effects does this have on the equilibrium real wage, hours worked, outp consumption? c. Do you think that preference shifts like this might explain why economies experience ot, with reference to the recessions (periods when output is low)? Explain why or why n key business cycle facts in Chapter 3

Answer 1