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3. (10 points) Suppose that Suppose that severe snowstorm destroys a signicant number of factories and homes. This can be modeled as a decrease in

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3. (10 points) Suppose that Suppose that severe snowstorm destroys a signicant number of factories and homes. This can be modeled as a decrease in current capital, K. Use the real intertemporal model (which includes the current labour supply, N S, and demand curves, N D , and the output supply, Y3, and output demand, Y, surves) to show graphically what happens to output, employment, real wages and the real interest rate. Also, infer what happens to investment and consumption

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