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Business, 13.12.2019 19:31 juniorlb01

Consider an economy that produces output with labor and capital, with those goods allocated to consumption and investment. suppose a breakthrough occurs that will increase productivity permanently beginning next period, but does not affect the current production function. explain the impact of this future higher productivity on the goods market today. that is, what happens to consumption demand, investment demand, aggregate demand, and aggregate supply? what happens to the market-clearing real interest rate and total output? justify all your answers. also illustrate graphically. can you say unambiguously what happens to market clearing consumption today? explain. can you say what happens to labor supply today?

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