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Unformatted text preview: your work in the space provided below (). Use Savings and Investment diagram along with the IS-LM model to determine the effect of higher user cost (uc) of capital on the long-run general equilibrium values of the real wage, employment, output, real interest rate, consumption, and price level . Explain your answers graphically. Use arrows in and under your graphs to show these changes. Hint: user cost of capital is the real cost of using capital. User cost is often associated with the depreciation of capital, due to the fact that capital wears out. ___________________________________________________________________________________________________________ _...
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This note was uploaded on 05/07/2010 for the course ECON 437 taught by Professor Genebirz during the Spring '09 term at Binghamton University.
- Spring '09