Answer to Question #139828 in Macroeconomics for Jayisa

Question

Consider a malthasian economy which is initially at a steady state consumption percapita of capital and labour per capital of /*.A shock hits this economy changing the steady state level of land per capital

Answer 1

As a result of the shock, the demand for land increases, leading to changes in the demand for labor. Consequently, the shock can be viewed as a factor influencing the demand in the land and labor market.