Suppose that there is a natural disaster that destroys part of the nation’s capital stock. (a) determine the effects on aggregate output, consumption, employment, and the real wage, with reference to income and substitu- tion effects, and explain your results. (b) do you think that changes in the capital stock are a likely cause of business cycles? explain with reference to your answer to part (a) and the key business cycle facts described in chapter 3.
answer; /// i believe that the correct answer is (b) money set aside for emergency repairs;
answer; at prices that violate government price regulations;
answer(d) the growth of consumption is likely to remain sluggish even as the economy begins to recover.;
answer/// product differentiation;