ECON-300
Question #4
4) Clearing the labor market: The market labor demand is a downward sloping curve of the real wage
rate. The market supply is assumed to be constant. The equilibrium value of the wage rate is determined
when the aggregate quantity of
ECON 300 Problem Set 7
1. Nominal interest rate includes inflation, where the real interest rate does not. The Fischer
equation is nominal interest rate = real interest rate + inflation rate.
2. The government prints money and gives it to households as tr
ECON 300 Problem Set 5
1) A higher capitalization utilization rate (k) leads to a higher depreciation rate. This is
because we assume that (k) is greater than zero when k equals zero, or that capital
depreciates even when it sits idle. Also, (k) depreciat
1. For permanent positive technological advances, there are positive changes in real GPD, (K, L),
a rise in mpk, a rise in interest rates which reduces household current consumption and promote
real savings. Income consumption increases by the amount of r
ECON 300 Problem Set 8
1. The governments taxes and transfers affect each households budget constraint. The
existence of government leads to two changes in the household budget equation. The first
change is subtracting real taxes from real income. The add
PS5 Q1
1. How does the capital utilization rate affect the depreciation rate
and why?
A higher capitalization utilization rate (k) leads to a higher depreciation rate. This is
because we assume that (k) is greater than zero when k equals zero, or that cap