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In Avataria the main source of income is hunting. Avatarians have an option to improve their hunting skills by training with the best hunters. Assume the following table describes the returns from training in Avataria: Return per year of training First 5 years of training 20% Next 5 years of training 10% Next 5 years of training 5 %
(a) Assume an avatarian with no training can catch 1 turkey per month. How many turkeys per month can an avatarian with 5 years of training catch? With 8 years of training? With 10 years of training? With 15 years of training?(b) Assume there are 100 avatarians in the country. A half of them has 10 years of training, while the other half has 15 years of training. What is the total number of turkeys caught by avatarians per month? What share of these turkeys is caught as a result of "raw skills" and what share is caught because of human ("hunting") capital gained through training?
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Calculate the percent change in the MM as well as the percent change in the MB during this period. Then calculate the percent change in the money supply during this same five year period.
Suppose that the money market is initially in equilibrium for an economy. Explain with the aid of a diagram how the market adjusts to.
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