In the real intertemporal model with investment, the government increases spending on roads and bridges expected to be completed in the future. Firms expect that the new roads and bridges will have a permanent impact on total factor productivity. () llustrate the effect(s) in the current period using relevant diagrams from the macroeconomics course. (i) Explain in detail (by making any necessary assumptions), the effects on NS, NO, yS and yD.

In the real intertemporal model with investment, the government increases spending on roads and bridges expected to be completed in the future. Firms expect that the new roads and bridges will have a permanent impact on total factor productivity. () llustrate the effect(s) in the current period using relevant diagrams from the macroeconomics course. (i) Explain in detail (by making any necessary assumptions), the effects on NS, NO, yS and yD.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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