Determine the effects of a decrease in the capital stock, Econometrics

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Determine the effects of a decrease in the capital stock

In the monetary intertemporal model, suppose that the money supply is fixed for all time. Determine the effects of a decrease in the capital stock, brought about by a war or natural disaster, on current equilibrium output, employment, the real wage, the real interest rate, the nominal interest rate, and the price level. Explain your results.

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Econometrics: Determine the effects of a decrease in the capital stock

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