Answer to Question #193201 in Macroeconomics for Row

Question

Assume the economy exists for two periods and works as in the monetary intertemporal model seen in the course. Prices are fully flexible. If the intertemporal substitution of leisure were absent:

a) Output demand will be fully elastic

b) Output supply will be fully elastic

c) Labour supply will be fully inelastic

d) Output supply will be fully inelastic

e) Labour demand will not be affected

Answer 1

C, D and E are correct.

c) Labour supply will be fully inelastic

d) Output supply will be fully inelastic

e) Labour demand will not be affected