What happens to the level of output in the steady state

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Assignment:

Canada is a closed economy and is in its long-run equilibrium initially. The contribution limit of Tax- Free Savings Account (TFSA) has been increased to $7000 in 2024.

a) In the context of the long-run classical model, examine the effects of the above event on the following variables in the long run: output real interest rate national savings real wage aggregate price level Explain your answer with the aids of ONE diagram for the market of loanable funds and ONE diagram for the labour market.

b) Based on your answer in part (a), what happens to the level of output in the steady state (i.e., the very long run)?

Reference no: EM133662300

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