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Consider an economy with a representative household having preferences u = c 1 3 3 2 and firms that use labour i to produce output
Consider an economy with a representative household having preferences u = c 1 3 3 2 and firms that use labour i to produce output yi 1-1 facing a demand function given by yi = y( pi/p)^2 where p is the aggregate price level. Finally, assume that aggregate demand is given by y = c = m/p where m can be thought of nominal money balances. set up the household's maximization problem and derive labour supply as a func- tion of the real wage wt/p
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