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Suppose we're modeling an economy using the Solow model. It begins in steady state. By what proportion does y? (the post-change steady-state per capita GDP) change in response to the following changes? Show your work/reasoning (a solution for y? will be a useful starting point).
(a) The investment rate doubles?
(b) The depreciation rate falls by 15%
(c) Productivity rises by 15%
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Why is quantitative easing used during liquidity trap when it lowers interest rates too?
Consider an economy that produces only three types of fruit: apples, oranges & bananas. In the base year the production & price data are as follows: Fruit
given the market demand curve is P=a-bQ and MC=D. derive mathematicaly a perfect compettition, B monopoloy, C, Cournot Duopoly, D cournot Tipopoly, E cournot quadropoly, F Stackleb
Lucas’ point of view, what are the limitations of the Keynesian model? What improvements does he suggest?
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