Question: Suppose there is a decrease in consumers' incomes. Describe and illustrate the impact on market for money and determine the changes, if any, on

Suppose there is a decrease in consumers' incomes. Describe and illustrate the impact on market for money and determine the changes, if any, on the equilibrium interest rate and quantity of money. Suppose an economy is originally at the long run equilibrium when a drop in businesses' economic outlook leads to a decrease in investment spending. Describe and illustrate the impact to the short-run equilibrium outcomes for real GDP and price level on the aggregate market for final goods and services. Given the change to real GDP, describe and illustrate the impact that this has on equilibrium outcomes for interest rate and quantity of money. Hint: Use the aggregate supply/demand model to answer the first part of this question and the market for money model to answer the second part.

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