ECO202Y1 Final: ECO202Y1 Final Exam 2016 Winter
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Questions 1 and 2 must be answered by students in both sections, morning and night: consider an economy with the production function: yt = 3x( Suppose the economy starts in the steady-state from part (a) associated with a saving rate of. Explain. (5: consider an economy with 3 sectors, with following cost and revenue structures: (total 9 points) The households consume whatever which has not consumed in other sectors as intermediate goods. These findings suggest that investment may even fall when the central bank lowers the interest rate, not rise as we assume in the is-mp and as-ad models. Some commenters have criticized these findings for inadequately controlling other factors that may influence both interest rates and investment. Consider the standard is-mp model, in which investment responds to interest rates in the way that we usually assume (/, / ^ = ,.
