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please help with this economics question. thank you in advance!!! 4. (25 points) Use the 1-period model we talked about in Chapter 5 (i.e., similar

please help with this economics question. thank you in advance!!!

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4. (25 points) Use the 1-period model we talked about in Chapter 5 (i.e., similar to the model in the previous question) to answer the following questions. (a) Suppose the capital stock K falls. In a graph with Production Possibilities Fi'ontier (PPF) and indifference curves, show the eects of this fall in capital stock on aggregate output, consumption, employment (labor) and real wage. Explain your results briey. (b) Compare your results with the table below in terms of cyclicality. Are the model im- plications consistent with the cyclicality of consumption, employment, and real wage observed in data? What assumption do we have to make to have the model consistent with the data? (c) Suppose government budget is always balanced, i.e., G = T. How should the government adjust the government expenditure to move the consumption back to the level before the fall in capital stock? Explain briey

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