Labor Market and Production: Wage=100-N Wage=25+2N Y=A*K.5N.5 Goods Market: C=50+2/3(Y-T)-200r I=100-200r G=70 T=50 Asset Market: MS=245/P MD=1/2(Y)-100r
a. Suppose that the current capital-labor ratio is 1 (the amount of capital exactly equals the number of workers) and that the total factor productivity (technology) equals 20. What are the equilibrium wage, employment level, and the full employment level of output? Draw this all graphically and make sure to label the graph
Labor Market and Production: Wage=100-N Wage=25+2N Y=A*K.5N.5 Goods Market: C=50+2/3(Y-T)-200r I=100-200r G=70 T=50 Asset Market: MS=245/P...
3. (55 points total) An economy's aggregate production function is given by Y- A K N-N2. The marginal product of labor for this production function is MPN A K- 2N. (a) (10 points) Assume that A- 8 and K- 10. Suppose that the labor supply function for this economy is given by NS 20+ 2w. Find the equilibrium real wage rate, the full employment level of employment, and the full-employment level of output for this economy Draw a production function...
Goods Market: Money Market: C=50 +0.8(Y-T) M/P=490 I=120-400r L(r,y)=-5y-100r G=110 T-50 a. What are the IS and LM equations? Calculate and show graphically the equilibrium output and interest rates? b. Suppose there is an increased risk in the financial markets changing money demand by 50 units (add or subtract 50 from money demand). Calculate the SR and LR. c. If the Federal Reserve wanted to stabilize the economy while at the SR equilibrium what policy would they need to conduct?...