Question: In this question, you will put into practice your knowledge of the effects of the fiscal policy. Consider the US economy in the context of

In this question, you will put into practice your knowledge of the effects of the fiscal policy. Consider the US economy in the context of the two-period model with investment and government. We will model the effects of the COVID-19 pandemic on the US economy and evaluate the effect of government intervention. Answer the following question that will guide you along the way. a Suppose that the COVID-19 pandemic negatively affected the TFP of the US economy. How does this affect labor demand and why? Draw a diagram to justify your answer. Hint: Remember that the labor demand is determined by the marginal product of labor, MPL = zF(K,N) N

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