Consider a dynamic (two-period) macroeconomic model with a representative household, a representative firm, and a government....

 

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Consider a dynamic (two-period) macroeconomic model with a representative household, a representative firm, and a government. The representative household makes consumption- saving and labor supply decisions. The representative firm makes labor demand and invest- ment decisions. (a) Clearly write down the representative consumer's problem and the necessary assump- tions. (b) Clearly write down the representative firm's problem and the necessary assumptions. (c) Clearly definite the competitive equilibrium for this economy. (d) Derive (graphically) the output demand curve. State the necessary assumption(s). Consider a dynamic (two-period) macroeconomic model with a representative household, a representative firm, and a government. The representative household makes consumption- saving and labor supply decisions. The representative firm makes labor demand and invest- ment decisions. (a) Clearly write down the representative consumer's problem and the necessary assump- tions. (b) Clearly write down the representative firm's problem and the necessary assumptions. (c) Clearly definite the competitive equilibrium for this economy. (d) Derive (graphically) the output demand curve. State the necessary assumption(s).