Question: [ 7 points ] Consider the example analyzed in class: rise in G . We used the IS - LM model ( & the
points Consider the example analyzed in class: rise in G We used the ISLM model & the diagram to analyze the impact from SR to LR where the economy started in general equilibrium. Review the video posted on CANVAS and then answer the questions below:
a What was the interaction between the output market and the market for money, that resulted in the change in r in the SR Describe it as done in the video.
b What was the adjustment in the price level that took place in the LR Just state.
c What was the impact on output & interest rate in the SR vs the LR you don't need to go into details here, just say if it rose, fell, or stayed unchanged in each case Was the result in the LR consistent with our findings in chapter Discuss.
d In lecture we used time diagrams to show the impact on several variables. Now, use time diagrams to show the impact of the shock over time on the following variables: Consumption, Price level, and real money supply. Note that in lecture in the video we did not show the impact on these variables, so you need to think about it and try your best to show the impact.
Step by Step Solution
There are 3 Steps involved in it
1 Expert Approved Answer
Step: 1 Unlock
Question Has Been Solved by an Expert!
Get step-by-step solutions from verified subject matter experts
Step: 2 Unlock
Step: 3 Unlock
