Consider the basic neoclassical model. Suppose there is an increase in At. Draw 2 versions of the model, one in which labor supply is relatively elastic (sensitive to the real wage) and one with a relatively inelastic labor supply (relatively insensitive to the real wage). How do the magnitudes of changes in Y, ri, Wt (nominal wage) and N: (labor) depend on the sensitivity of labor supply to the real wage? Explain
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This problem indicated At (exogenous variable represents as Technology as looks at Cobb-Douglas production functions).
This problem indicated At (exogenous variable represents Technology as can be seen in various Cobb-Douglas type production functions).
Then, the objective is to model 2 graphs considering 2 labour offers - one relatively elastic and the other inelastic -, and to analyse the effects of variables such as Yt (output), rt (interest rate), wt (nominal wage) and Nt (labour) and how they are impacted by these offers and thus explain what happens to the real wage.
This problem was sent 2 times, but due to the complexity it was rejected. I urgently need a resolution.
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