ECON 303~ FINAL EXAM REVIEW.pdf 7 Adobe Acrobat Reader DC (32bit) File Edit View Sign Window Help ECON 303~ TEXTBM ' ECON 303~ FINAL X @@3/4k@@125%vv?a4mf> Home Tools ' ECON 303~ TUTOR,,, 72? (13 E Q @ 4 H' p Type hereto search 4' What do you conclude? [05 points] Question V [20 pts] Using the Real Intertemporal Model covered in class7 assume 2 increases in the current period, and the consumer expects the productivity to return to its initial level in period 1, that is, he expects 2' to decrease. ' Describe the expected shifts in the NS7 Nd7 Y5, and Yd curves. Give the driver of each shift. [05 pts] . Assume the changes in Yd and Y5 are such that Y* remains unchanged. How does the equilibrium interest rate change? [05 pts] . Using a graph7 illustrate how the nal interest rate adjustment in the labour market affect the equilibrium employment. Will the equilibrium employment decrease or increase? [05 pts} Hint: Use the fact that the equilibrium Y* and N * are linked by the production function Y" = 2F(K, N*). . Comment the nal changes in the equilibrium consumption (0*) and investment (1*). [05 ptS] , X (D Q Sign In (,9. '2 'o & ECON 303~ FINAL EXAM REVIEW.pdf - Adobe Acrobat Reader DC (32-bit) X File Edit View Sign Window Help Home Tools ECON 303~ TUTOR... ECON 303~ TEXTB... ECON 303~ FINAL ... X ? A Sign In A 4 /4 125% Question 6 [20 pts] In the real intertemporal model with investment, suppose consumer's preferences shift so that they want to consume less leisure and more consumption goods. Using some graphs, determine the effects on the equilibrium output, interest rate, wage, employment, consumption and investment. Type here to search O N 9 X X ENG 8:13 PM INTL 4/20/2021 10ECON 303~ FINAL EXAM REVIEW.pdf 7 Adobe Acrobat Reader DC (32bit) File Edit View Sign Window Help Home Tools ' ECON 303~ TUTOR,,, lirGEBQ ECON 303~ TEXTBM ' ECON 303~ FINAL X @@3/4k@@@125%vv?a4a> Question IV [20 points] Consider an economy in which the representative consumer preferences are described by U(C,l) = gal/2 + 211/24 The total number of hours available to the representative consumer is h = 1, and the market real wage is w. The representative rm produces the nal consumption good using the technology function Y = 2N Where N is the labour, and z = 3. Assume the government sets the level of its spending to G : 0.75 which has to be nanced through a proportional tax if. . What is the equilibrium wage w* in this economy? [04 points] . Find the the Pareto optimal allocation (lpo, N 120, Ypo, 0120) by solving the social plan- ner's problem. [05 points] . Find the competitive equilibrium allocation (tCE, log, NCE, YCE, 00E). [07 points] . What do you conclude? [05 points] Question V [20 pts] , >
