Economics

1. (40 points) For each of the statements below write true or false and then provide a short (1-2 sentences) explanation for your answer. a. A temporary positive technological shock increases the equilibrium quantity of capital in the economy given the user cost of capital. b. A permanent positive change in technology leads to a permanent increase in the real consumption. c. A rise of the corporate tax rate increases the effective user cost and decreases the desired level of capital stock. d. A temporary increase of the wage rate creates a strong substitution effect for supply of labor. e. An increase in the interest rate has a positive effect on investment