Final answer:
The neoclassical theory suggests that an increase in labor supply from immigration will reduce real wages and possibly increase the real rental price of capital. Destruction of capital from an earthquake will increase both real wages and rental prices, whereas technological advancements are likely to increase both. High inflation that doubles all prices should leave real wages and rental prices unchanged.
Step-by-step explanation:
Using the neoclassical theory of distribution to predict the impact of various events on real wages and real rental price of capital:
- a) Wave of immigration increases the labor force: It is likely to reduce real wages due to increased labor supply. The real rental price of capital could increase if the additional labor makes capital relatively scarcer in supply.
- c) Earthquake destroys some of the capital stock: This would generally increase real wages in the short run because the labor now has less capital to work with, making labor relatively scarcer. The real rental price of capital would increase because the remaining capital is now more valuable due to its reduced quantity.
- e) Technological advance improves the production function: This typically increases real wages as productivity per worker increases. It also tends to increase the real rental price of capital, as advanced technology makes capital more productive.
- g) High inflation doubles the prices of all factors and outputs in the economy: If all prices, including wages and capital rents, double, then in theory, the real wage and the real rental price of capital would not change, as their purchasing power remains constant.