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An economy consists of two regions, the North and the South. The labor market is initially in an economy-wide equilibrium, with 1,000,000 people employed in the North at $25 per hour and 2,000,000 in the South at a wage of $15 per hour. Assuming that the cost of moving from North to South and South to north is negligible and that the employees are perfect substitutes for one another, what would the wage be in the future and how many people would live in the North and the South. Jobs are also perfectly mobile.
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Matt and Johnny both purchase pop and chips at the same convenience store. They have different tastes for pop and chips, so Matt buys 3 cans of pop and 10 bags of chips whereas Johnny buys 15 cans of pop and 2 bags of chips.
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What is the current total investment? b) What is the current unintended investment? c) Is this an equilibrium outcome? d) What do the Keynesians say will happen to real GDP?
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