Illustrate each of the following situations with a graph showing the IS curve and the Fed rule,
Question:
Illustrate each of the following situations with a graph showing the IS curve and the Fed rule, and explain what happens to the equilibrium values of the interest rate and output:
a. A decrease in G with the money supply held constant by the Fed
b. A decrease in G with the Fed changing Ms by enough to keep interest rates constant
c. A decrease in P with no change in government spending
d. An increase in Z with no change in government spending
e. An increase in P and a decrease in G
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Related Book For
Principles of Macroeconomics
ISBN: 978-0134078809
12th edition
Authors: Karl E. Case, Ray C. Fair, Sharon E. Oster
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