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Unformatted text preview: ) , S ± 1 , S g , and S N on those two cases before coming to the next session. 2. Saving (Capital Supply) and Investment (Capital Demand) Problem The discussion for the capital market is very similar to the discussion for the labor market. 8 > < > : Labor Demand ² Capital Demand ( = Firm&s pro±t maximization problem Labor Supply ² Capital Supply ( = Household&s utility maximization problem Actually, we have already solved for the capital supply function (i.e., saving function) S ± 1 on the problem constructed above. I will explain (i) the basic properties of S ± 1 , most of which are very straightforward, (ii) the derivation of the capital demand function, and (iii) the basic properties of the capital demand function. 1...
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This note was uploaded on 12/11/2009 for the course ECON 180364203 taught by Professor Edwardmcdevitt during the Spring '09 term at UCLA.
- Spring '09