Suppose a series of terrorist attacks destroys half the capital in the United States but does...
Suppose a series of terrorist attacks destroys half the capital in the United States but does not affect the population. What will happen to potential output and to the real wage?
Homework Answers
It can actually be mentioned that if the series of terrorist output affected the half of the capital and doesn't affect the population, then in terms of factors of production, relative the capital becomes scarce this can actually get to decrease the production and with the decreasing the level of the production as even the capital is not there, the potential output will also be reduced and since relatively the demand for labour decreases to less capital per labour , the real wage also decreases
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Suppose a series of terrorist attacks destroys half the capital
in the United States but does...
Suppose that there is a natural disaster hits that destroys part of the nation's capital stock
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