According to the classical model, labor supply is exogenous. However, if labor supply is an increasing function of real wage; assume Ls=L(W/P) with L’ (W/P) > 0 A) With the model change, how does an increase in capital stock affect emplyment nad real wages B) And how does does an increase in gov purchase affect total output?

According to the classical model, labor supply is exogenous. However, if labor supply is an increasing function of real wage; assume Ls=L(W/P) with L’ (W/P) > 0 A) With the model change, how does an increase in capital stock affect emplyment nad real wages B) And how does does an increase in gov purchase affect total output?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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