The supply side of the economy is defined by: Y = 8L1/4K 3/4 L = 625 K = 625 The demand side of the economy is defined by: C = 400 + 0.8(Y-T) I = 900 – 1250r G = 1000 T = 1500 a. Using the production function, calculate the supply of output. b. Calculate the real rental rate of capital. What is the capital owners' share of income in this economy?

The supply side of the economy is defined by: Y = 8L1/4K 3/4 L = 625 K = 625 The demand side of the economy is defined by: C = 400 + 0.8(Y-T) I = 900 – 1250r G = 1000 T = 1500 a. Using the production function, calculate the supply of output. b. Calculate the real rental rate of capital. What is the capital owners' share of income in this economy?

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter22: Aggregate Demand And Aggregate Supply

Section: Chapter Questions

Problem 12P

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