Question: Using ISLM analysis explain what would cause the aggregate demand
Using ISLM analysis, explain what would cause the aggregate demand curve to be steep.
Answer to relevant QuestionsWhat would cause (a) a steep ADI curve; (b) a gently sloping ADI curve? Compare the short-run and longrun effects of (i) a temporary adverse supply shock and (ii) a permanent supply reduction under each of (a) and (b).What factors determine the effectiveness of discretionary fiscal policy?Compare the relative merits of targeting (a) The money supply; (b) The exchange rate; (c) The rate of inflation.For what reasons do countries experience very different long-run rates of economic growth from each other?What is the relationship between ‘successful’supply-sidepolicies and unemployment in (i) the short run and (ii) the long run, according to (a) Keynesian and(b) Monetarist assumption?
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