4. Show that in the NRM, under credit rationing, the autarkic wage-interest ratio is lower than the one under perfect credit market but inequality between capital labour must go down when the economy opens up for trade, which is exactly opposite to what we expect under perfect credit market.

4. Show that in the NRM, under credit rationing, the autarkic wage-interest ratio is lower than the one under perfect credit market but inequality between capital labour must go down when the economy opens up for trade, which is exactly opposite to what we expect under perfect credit market.

Brief Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781337091985

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter12: Money Growth And Intlation

Section: Chapter Questions

Problem 6CQQ

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4. Show that in the NRM, under credit rationing, the autarkic wage-interest ratio is lower than
the one under perfect credit market but inequality between capital labour must go down
when the economy opens up for trade, which is exactly opposite to what we expect under
perfect credit market.

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