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- The COVID-19 pandemic has substantially affected the Canadian economy in several dimensions.As the Canadian governments, both federal and provincial, have issued various forms of “stay home”instructions, workers have to work from home. Working from home has two effects: firms are nowless productive and hence the current TFP z declines; labor supply N s(r) declines. In addition,consumers can only go grocery once a week and hence consumption demand Cd(r) declines for anylevel of interest rate and income. Answer the following question. Use a real business cycle model that we studied in Chapter 13 to analyze theimpact of Covid-19 in terms of output, employment, consumption, investment, wage, interestrate, money demand, and price. Make sure you show three figures: A figure illustratingthe goods market, a figure illustrating the labor market, and a figure illustrating the moneymarket. (In this question we assume that the change in output supply dominates the changein output demand, and the…What is the economic interpretation of the intertemporal budget constraint?Describe how the endogeneity versus exogeneity of consumption expenditures (i.e., the household sector) affects the size of predicted output multipliers by an input-output model.
- Disposable income - 200, 225, 250, 275, 300Consumption - 205, 225, 245, 265, 285 Refer to the above data. The marginal propensity to consume is;If consumption is defined as C = 2,400 + 0.9Y, then the value of the marginal propensity to consume is 0.9. True FalseSouth Africa’s economy is affected by high FDI fluctuations. Propose measures to stabilise and increase the country’s FDI inflows in the post COVID era and comment on their suitability (highlight 10-20 innovative advantagesand disadvantages to address the challenges of uncertainty and instability of FDI into the country.)