Suppose there is a shift in the representative consumer's preferences. Namely, the consumer prefers, given the market real interest rate, to consume less current leisure and more current consumption goods.

1. Determine the effects of this one current aggregate output, current employment the current real wage, current consumption, and current investment. Hint: both the output supply and output demand curves shift to the right, i.e., they increase. If output demand increase by more than output supply, what happens to the interest rate? What if the reverse occurs? What if they increase by the same amount? How would each of these three possibilities effect current consumption and investment?