Exercises - model 3 (with loanable funds market) {.smaller} 1. On a copy of the graphs found on slide 18 of the second presentation on the classical model, identify the equation for each curve using the numbers in the equations on slide 15 of the same presentation. 2. If the money supply increases, does the new macroeconomic equilibrium depend on the savings rate? To reach a conclusion, you must present your solutions of the numerical model for zero and positive savings rates. (And before you ask, the savings rate is the amount of savings divided by disposable income) 3. For Demonstration 3 (wage tax increase), verbally explain the shifts in the different curves and the new equilibrium points as I showed you on slide 14. 4. In the classical model, nominal wage rigidity is the only source of unemployment. If , is it possible to restore full employment? Justify your answer with numerical or graphical analysis.