Determine effect on aggregate output-consumption-employment

Assignment Help Business Economics

Reference no: EM131007184

1) Suppose that there is a natural disaster that destroys part of the nations capital stock.

(a) Determine the effect on aggregate output, consumption, employment, and the real wage, with reference to income and substitution effects, and explain your results.

(b) Do you think that changes in the capital stock are a likely cause of business cycles? Explain by referencing your results in part a and the key business cycle facts

Reference no: EM131007184

Questions Cloud

Consider the traditional farm problem : Consider the traditional farm problem: Food can be viewed as a necessity, and overall has a price-inelastic demand. Suppose that 10% of each farmer's crop were destroyed. What is the effect on farmer income? If the price elasticity of demand is -0.5,..

The income elasticity of demand for hardback books : Suppose that the income elasticity of demand for hardback books is 2.5, that household incomes are rising at 2% a year., and that 2 million are initially being sold per year. The own price elasticity of demand is -0.5 and the cross-price elasticity o..

What are the seven basic steps in reviewing computer based : What are the seven basic steps in reviewing computer-based systems?

Compute the unit product cost : The company applies manufacturing overhead on the basis of machine hours. The predetermined overhead rate is $18 per machine hour. Compute the unit product cost that would appear on the job cost sheet for this job.

Determine effect on aggregate output-consumption-employment : Suppose that there is a natural disaster that destroys part of the nations capital stock. Determine the effect on aggregate output, consumption, employment, and the real wage, with reference to income and substitution effects, and explain your result..

Develop the essential analytical and problem solving skills : Develop the essential analytical and problem solving skills required of lawyers and, more immediately, that will be important for your law exams.

About the one-period macroeconomic model : The following questions are about the one-period macroeconomic model discussed in class. Notice that nothing has been specified about the preferences of the consumer or the production technology of the firm. Suppose there is a new production technolo..

Why different pricing policies appropriate in circumstances : Explain why different pricing policies may be appropriate in different circumstances, illustrating your answer by reference to Leisure Furniture Ltd and Home Furniture Ltd

What are some of the major tasks that should be accomplished : A e audit report and post audit follow-up are important steps in the audit process, what are some of the major tasks that should be accomplished by the audit in these steps?

User Account

All Pages