Consider this shock: Ax >0 in the real intertemporal model with investment. That is, an increase in credit market uncertainty (x↑). This shock causes all of the following except O a direct fall in investment (IL) O a reduction in the borrowing interest rate (r'!), which is equal to the sum ofr plus x O a contraction of the labor supply (N$L) a contraction of the output demand (Yd)

Consider this shock: Ax >0 in the real intertemporal model with investment. That is, an increase in credit market uncertainty (x↑). This shock causes all of the following except O a direct fall in investment (IL) O a reduction in the borrowing interest rate (r'!), which is equal to the sum ofr plus x O a contraction of the labor supply (N$L) a contraction of the output demand (Yd)

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter10: Aggregate Supply

Section: Chapter Questions

Problem 2.3P

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