(e), and include the values of desired investment at r = 003 under each case. 3. (20 points) Let's compare the Canadian economy in 2010 to the current economy. The two major changes between 2010 and 2020 are: (1) total factor productivity has permanently increased (2 and z' both increase); and (2) the capital stock, K, has increased. (a) (15 points) Using 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, curves), show graphically how these changes have affected output, employment, real wages and the real interest rate. What happens to consumption? Based on your answer to question 1(e), what happens to investment? (b) (5 points) Show that it is possible that the real interest rate remains unchanged. Look briey at gure 1.10 (page 19) in the Williamson book between 2010 and 2020. According to this chart, is it realistic for real interest rates in a growing economy to show no long-term trend? I1n - 1 \\f'l -1 '1 Ann-I n 1 1 11-1 - \"'1'1 (N1 1- m1