Consider the following model of the economy: ...
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Accounting
- Consider the following model of the economy:
where the initial values of A = 6 and K = 10.
The initial conditions in the goods market are as follows:
G = 100
T= 100
The initial conditions in the asset market are as follows:
L = 78 + 0.5Y- 1000(r + e) Nominal Money supply: M = 1800 Expected inflation is equal to 2% (e = 0.02)
1 a) (6 points) Solve for the labor market clearing real wage (w*), the profit maximizing level of labor input (N*), and the full employment level of output (Y*). Please show your work.
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