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Unformatted text preview: interest rates. 4 Extension Extension What if prices are flexible? To examine this, we must include the labor market and real wage computation. ) , ( ) ( ) ( ) (=== P M r Y L G r I Y S N F Y N P w N d Define the following variable as a convenience: ( 29 2 ∂ ∂ = P w P w N X d 5 Extension (Continued) Extension (Continued) 1 1 1 1 2 2== Jac X F L P M L L I S F X P M L I F X dG dY N r r Y r Y N r r N (Note that the denominator turns out to be positive.) < = dG P w d dG dP dG dr Jac X L dG dN r Similarly:...
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 Spring '11
 Staff
 Economics, Macroeconomics, Monetary Policy, Trigraph, comparative static analysis

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