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Notice that the question is how an INCREASE will affect both the Consumption AND the Savings functions.
Notice that the question is how an INCREASE will affect both the Consumption AND the Savings functions.Chapter 11, Pg 249, Exercise 7(Contractionary Gap) What does a Contractionary Gap imply about the actual rate of unemployment relative to the natural rate? What does it imply about the actual price level relative to the expected price level? What most happen to real and nominal wages in order close a contractionary gap?Another one for thinking. Notice that it has 3 questions; the first two are about What Happens During a Contractionary Gap for Unemployment and Price Levels and the Third is about How It is Closed the CG. Two Steps.Don't complicate yourselfs, this are simple ones you just have to read the sections carefully. Is going to be available for two weeks as usual but don't get behind.
