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1 (10 points) Two or three sentences per prompt suffice. (a) Explain in your own words what 'classical dichotomy' means within the Neoclas- sical model.
1 (10 points) Two or three sentences per prompt suffice. (a) Explain in your own words what 'classical dichotomy' means within the Neoclas- sical model. (b) Explain in your own words why the IS-curve in the Neoclassical Model is downward- sloping in the (rt, Yt)-space. (c) Explain in your own words what 'crowding out' means within the Neoclassical model. (d) Explain in your own words why higher future total factor productivity At 1 increases investment today in the Neoclassical model. (e) Explain in your own words why an increase in the real interest rate is decreasing money demand in the Neoclassical model
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