Evidence indicates that a recession occurs at about the same time as a decrease in investment. According to the real business cycle theory, the decrease in investment is attributable to Select one: a. a decrease in productivity.

Under the classical dichotomy, which of the following does not determine real GDP in the long run? The investment rate The aggregate price level TFP New ideas.

Which of the following is the most likely to occur in the Circular Flow Model when a recession takes place? the shoe factory may decide to maintain the same amount of machinery in their plant the Ford car dealership reports higher than usual sales O very little activity by unemployed workers on online job search sites is reported Tom's Corn Farming Inc decides to purchase 200 acres of additional farmland

Suppose that the economy is summarized by the following: Technology (Production Function): Yt = 10 (Kt)0.3 (Lte)0.7 Consumption function: Ct = 0.8Yt Depreciation rate: 8% (i.e. δ= 0.08) Population growth: 2% (i.e. n = 0.02) Technological growth: 4% (i.e. g = 0.04)   QUESTIONS:  Find the steady state (long run) equilibrium values of kte, yet, and cet. Show graphically what would be the effect of a increase of the saving rate to s=0.4? Show graphically what would be the effect of an increase in population growth to 0.04? Assuming that in 2013 the US economy is in the steady state and L2013 = Le2013 = 8, what is the value of ke2014, ye2014, ce2014 , k2014, y2014, and c2014 ? Use your answer to e) to calculate the growth rate of ket, yet, cet , kt, yt, and ct Based on your answers to the previous questions and on your knowledge of how the Solow growth model works, explain what policies should a less-developed country pursue to raise its level of income in the long-run?…