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Question: 11 consider an economy that abides by the standard classical...

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11. Consider an economy that abides by the standard classical model specifications. Suppose the economy experiences an earthquake that destroys a large amount of capital in the econ- omy (assume the population in unaffected and thus remains constant). Using graphs and written discussion, examine the economy dynamics in the wake of the shock Expectations are as follows: . Capture the timing in your written discussion If a curve shifts, explain why/economic intuition . If a market is in disequilibrium, explain how it returns to equilibrium . Explain, if possible, the final outcome in terms of important variables: Y,N, P,C, w

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