A Suppose There Is a Technological Breakthrough That Increases the Productivity

question 52

Essay

a. Suppose there is a technological breakthrough that increases the productivity of all capital and, consequently, increases the demand for investment. Using the long-run model of the economy developed in Chapter 3, graphically illustrate the impact of the increased investment demand. Be sure to label:
i. the axes
ii. the curves
iii. the initial eqilibrium values
iv. the direction curves shift
v. the terminal equilibrium values

b. State in words what happens to
i. the real interest rate
ii. nafional saving
iii. investment
iv. consumption
v. output.

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Definitions:

Selectively Permeable Membrane

A barrier that allows certain molecules or ions to pass through it by diffusion and occasionally specialized processes.

Osmosis

The movement of water molecules through a semipermeable membrane from a region of lower solute concentration to a region of higher solute concentration to equalize the concentrations on both sides of the membrane.

Active Transport

Transport of molecules across the membrane of a cell from areas where they are less concentrated to areas where they are more concentrated, which demands energy.

ATP

Adenosine triphosphate, a molecule that stores and transfers energy within cells, facilitating various biochemical processes.