Answered step by step
Verified Expert Solution
Question
1 Approved Answer
11. Consider the following model of a closed economy: Y = AK1/21 1/2 Yd =C+1+G C = 200 + 0.8(Y - T) 1 = 2000
11. Consider the following model of a closed economy: Y = AK1/21 1/2 Yd =C+1+G C = 200 + 0.8(Y - T) 1 = 2000 - 20,000r KS = 400 LS = 225 A = 10 G = 500 T = 1000d. Recalculate the equilibrium values of W/P, R/P, Y, S,, S, I, and r if the capital supply (KS) increases from 400 to 625 (all else equal). e. Using the original quantity of capital supplied (400), recalculate the equilibrium values of W/P. R/P, Y, SH, S, I, and r if taxes (T) decrease from 1000 to 500 (all else equal)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started