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Cards (1)
Effects
on the model's endogenous real variables when there is an increase in the size of the labor force
1.
NS
increases
resulting in
excess
labor
supply
at the original (W/P)1
2.
W
falls, (
W/P
)
falls
clearing the
labor
market
3.
N
increases
and (
W/P
)
falls
4.
Increase
in
N
increases
the level of
Y_s
5.
Y
up
increases
S
and
C
6.
S
has
increased
for the given
r
, there is
excess
supply of
loanable
funds
putting
downward
pressure on
r
7.
r
falling
induces an
increase
in
I
and induces a
decrease
in
S
(which is an
increase
in
C
)
8.
Y
up
increases
the
demand
for
money
9.
Excess
money
demand
represents an
excess
supply of
output
10.
Price
level
falls
to clear the
money
market
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