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    • Thread Starter

    Consider the following version of a Classical Model.
    n^d(w, r) = n^s(w) (1)
    n = n^d(w) (2)
    y = f(k, n) (3)
    y = c(r, y - t) + I(r; y - t) + g (4)
    M/P = L(i, y) (5)

    What are the effects on this model economy of an unanticipated increase in the nominal money supply?

    Step 1- take the derivatives of all the equation with respect to each variable
    Step 2- used the derivative of equation 1-3 to find dr and dy

    Why are you posting this at 3.30am???
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