Predict, with the aid of the IS-LM and the SAS-AD models, the short-run and long-run results of each of the following:
(a) A decrease in the nominal money supply
(b) An increase in net exports that results from a depreciation of the dollar. (Both models measure real GDP on the horizontal axis, so aligning the diagrams vertically will help you to see how they are related. Assume the economy is initially in long-run equilibrium at the natural real GDP [YN]. Also, remember that changes in the price level shift the LM curve.)