Question
Please help me to solve these two questions thank you! 1 The costs of expected inflation cause productive resources of an economy to be expended(used)
Please help me to solve these two questions thank you!
1 The costs of expected inflation cause productive resources of an economy to be expended(used) on adjusting to changing price. Explain how each of the following costs of expected inflation distort the allocation of productive resources:
a. Shoe-leather costs
b. Menu costs.
2 Use the neoclassical theory of distribution to predict the impact on the real wage and the real rental price of capital of each of the following events:
a. An earthquake destroys some of the capital stock
b. A technological advance improves the production function
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