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Lecture 25

ECON 303 Lecture 25: Econ 303-13

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ECON 303
Mehrab Kiarsi

Exam based on Ch b. Dec. 201V, Eco Q.2 When not ohi TPET but TPE T Expected future income read fetime wealth More than in the case. of -on the eriod not the Consumption d because a shortyved hock to on uurunt period ct Expe PET Expect increase in the future Dutput and MPK IT Nest more m rent period Supply h the next period will increase r but in the current there no ich eriod Yn general, whether r ihurames or not derends on how much and y shift d shifts right greatl But in this cas I the shock impacts strongly As a result CL Relative price of u an d becomes expensive) t Note Term shock for sure w and r Note graph a change in r cadres movements only along the curve, but does not shitt the urve HoweN anything that shths d uurve or ,uurve will uause Impact the ves changes, doerhit change directly only move along when But, Y influenuet C d there and CII II li, N shifts the uurv short r Indirectly in uences the shit tr of the yd and y urne. MPN T NTT ecause we assume that when MPNT, firms want to hire more r v Intertemporal Substitution effect Ni and (cheaper to borrow) Ultimately hat happens to I der end since there is two force moving T in opposite directions The trade off between the income e and the ffect STde note substitution effeut denendy on the utility tunution
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