Question
a. Based on the Gordon Growth Formula what would happen on V if value of g and r fall. b. Suppose an earthquake destroys a
a. Based on the Gordon Growth Formula what would happen on V if value of g and r fall.
b. Suppose an earthquake destroys a large part of the capital stock at time t. Assume interest rates and future labour supply are not affected by the earthquake, and there are no adjustment costs.
b) i. What will happen to investment?
b) ii. How does Kt+1 compare with and without the earthquake?
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Managing in a Global Economy Demystifying International Macroeconomics
Authors: John E. Marthinsen
2nd edition
128505542X, 978-1305176157, 1305176154, 978-1285055428
